^:-;'^> 


7.-. 


TRUST  COMPANIES 

Their   Organization,  Growth 
and   Management 


CLAY  HERRICK 


BUURS 

pteiisKiNc 

'11 


NEW    YORK 

BANKERS   PUBLISHING   COMPANY 

looy 


V\&     Vv 


mmt 


Copyright  1909 
•BANKERS   PUBLISHING  COMPANY 
'     ■'  \  NEW  YORK 


PREFACE. 


THH  writer  is  spared  the  task,  somewhat  eoinmon  to  authors,  of  offer- 
ing an  apology  for  the  addition  of  another  "to  the  already  largt; 
ninuher  of  books  on  the  subject, "  because  the  literature  on  the 
subject  of  trust  companies  is  small  in  amount,  and  nearly  all  of  it  has 
appeared  since  the  preparation  of  this  work  was  begun. 

7'he  present  volume  is  composed  of  a  series  of  articles  which  appeared 
ill  '"rill  Bankers  .M.igazine"  of  New  York  during  the  years  lyot  to  l{)07, 
iiieliisi\ f.  When  the  preparation  of  the  series  was  begun,  in  lyo.S,  there 
li.id  been  j)ublished  but  one  treatise  on  trust  companies — Mr.  George 
Cator's  monograph  on  "Trust  Companies  in  the  United  States,"  a  valu- 
able work,  but  one  which  treats  the  subject  briefly  and  from  the  academic 
standpoint.  The  only  other  writings  on  the  subject  consisted  of  advertis- 
ing booklets  j)ublished  by  trust  companies,  and  a  very  few  magazine  arti- 
cles. In  lyoi,  Mr.  Ernest  Heaton  issued  his  "The  Trust  Comj)any  Idea 
and  Its  Development,"  a  brief  but  instructive  sketch  of  the  develoj)ment 
of  the  institution  in  the  United  States,  Canada,  Australia  and  elsewhere. 
The  following  year  there  appeared  Messrs.  Kirkbride  and  Sterrett's  excel- 
lent work  on  "The  Modern  Trust  Company,"  treating  the  subject  at 
length  and  from  the  {)ractieal  standi)oint.  So  far  as  the  writer  knows, 
these  comj)rise  all  the  general  works  tiiat  have  been  published  on  the  sub- 
ject. A  number  of  the  financial  periodicals  ))ublish  articles  relating  to 
trust  com})anies  from  time  to  time,  and  many  trust  comj)anies  issue  adver- 
tising booklets  containing  important  information  regarding  their  methods 
of  business.  But  the  material  at  the  dis])osal  of  one  who  would  make  a 
study  of  the  trust  company  from  either  the  historical,  academic  or  prac- 
tical standpoint  is  thus  far  (juite  limited.  The  |)resent  volume  contains  the 
only  attempt  yet  made,  so  far  as  the  writer  knows,  to  present  an  historical 
sketch  of  the  development  of  the  American  Trust  Company. 

The  writer  is  conscious  of  some  defects  in  the  work,  and  no  doubt  there 
arc  other  defects  of  which  he  is  not  conscious.  The  fact  already  men- 
tioned, that  the  chaj)ters  of  the  book  were  originally  written  as  a  series  of 
articles  appearing  monthly  in  a  magazine,  may  account  for  some  })eculiari- 
ties  of  method.  The  time  at  the  writer's  disj)osal  Ix'ing  such  as  could  be 
found  when  not  employed  at  his  regular  duties,  was  not  sufficient  to  enable 
iiim  to  finish  various  jiarts  of  the  work  to  his  own  satisfaction.  He  has. 
however,  taken  the  greatest  pains  to  insure  accuracy  in  all  statements 
made,  and  has  verified  much  of  the  contents  of  the  book  by  jiersonal  inter- 
views and  by  correspondence  with  numerous  trust  comjjany  officials  and 
employees.  Recognizing  the  fact  noted  in  the  text  of  the  book  that  there 
is  considerable  diversity  in  methods  and  })ractices  among  different  trust 
companies,  he  has  endeavored  to  make  the  work  fairly  representative  of 
the  most  common  usages,  giving  in  the  chapters  on   forms  and-  records, 


IV  PREFACE. 

samples  of  those  used  by  a  number  of  different  companies.  This  plan 
made  impossible  the  following  out  of  one  complete  system  of  forms  and 
records  such  as  a  single  company  uses,  a  defect  which  is,  in  the  writer's 
opinion,  more  than  overcome  by  the  advantage  to  the  reader  of  having 
before  him  illustrations  of  the  methods  of  a  large  number  of  progressive 
companies.  In  the  endeavor  to  make  the  work  useful  to  the  greatest  num- 
ber of  trust  companies,  the  writer  has  aimed  to  have  it  representative  of 
the  forms  and  methods  of  the  company,  of  average  size. 

While  the  writer  is  alone  responsible  for  all  views  and  statements  pre- 
sented, he  is  under  obligation  to  various  gentlemen  for  information  courte- 
ously given.  In  particular  he  wishes  to  acknowledge  his  indebtedness  to 
the  officials  of  the  various  companies  whose  forms  are  used  to  illustrate  the 
hook,  for  the  use  of  the  forms  and  for  information  given  in  response  to 
letters;  to  state  officials  for  information  regarding  state  legislation;  to 
W.  E.  Crittenden  for  the  preparation  of  the  chapter  on  Title  Insurance; 
to  the  Old  Colony  Trust  Company  of  Boston  for  permission  to  reprint  its 
Rules  for  Stock  Transfers;  to  E.  A.  Feasel,  Librarian  of  the  Cleveland 
Law  Library,  for  access  to  the  library  in  the  preparation  of  the  chapters 
on  trust  company  laws;  to  E.  E.  Newman  for  suggestions  regarding  the 
detail  work  of  the  Corporations  division  of  the  Trust  Department;  to 
James  Borrowman  for  information  regarding  the  Australian  trust  com- 
panies; to  Frederick  Vierling  for  information  regarding  the  Real  Estate 
Department  and  for  permission  to  print  his  rules  governing  stock  issues 
and  papers  required  in  accepting  bond  trusts ;  to  the  Franklin  Trust  Com- 
pany for  permission  to  print  its  By-laws.  Acknowledgment  is  made  in 
foot-notes  throughout  the  book  for  information  due  to  various  authorities 
quoted. 

In  preparing  the  articles  for  publication  in  book  form,  the  statistical 
matter  in  the  chapter  on  the  history  of  the  trust  company  movement,  and 
the  summary  of  the  state  laws  (originally  published  in  1904),  and  other 
matter,  have  been  brought  down  to  the  year  19O8,  inclusive. 

CLAY  HERRICK. 

Cleveland,  O.,  June,  1909. 


TABLE   OF   CONTENTS. 


CHAPTER  I. 
IIISTOHV   OF   THE   TRUST   COMPANY    MON'J.M  KNT    IN     IHK 
INITKD  STATES,  pp.  1-32. 

Diversity  «)f'  I''iinction.s,  1 — I-'irst  (jrants  of  Trust  Powers,  ^J  —  Present 
Condition  of  the  Four  Earliest  Companies,  () — Other  Early  Companies, 
7^ — Relative  Progress  of  Trust  Companies  and  Savings  Hanks,  9 — 
Organization  of  Companies  After  the  Civil  War,  10 — Ereedman's  Sav- 
ings and  Trust  Co.,  12 — Comptroller  Knox's  Criticism  of  Compani<'s, 
\S — Competition  Between  Banks  and  Trust  Companies,  \\ — Steady 
Development,  IT) — Growth  froni  187.'',  16 — Chart  Showing  Growth,  18 
— Growth  of  Trust  Companies  and  Other  Banks  Comj)ared,  19 — Sta- 
tistics of  Suspensions,  22— Statistics  I87.'")-19(>8,  2") — Reserves,  26 — 
Present  Statistics,  28 — Recapitulation,  30 — Causes  of  Growth,  31. 

CHAPTER  II. 

THE  FUNCTIONS  Ol'  TRUST  COMPANIES,  pp.  .■!3-53. 

Definition  of  "Trust  Company,"  SS — Nature  and  \'ariety  of  Individual 
Trusts,  34 — Probate  Business,  37 — Investment  Business,  38 — Real 
E-state  Business,  10 — Insolvency  Business,  10. — Trustee  or  Agent  for 
Corporations,  H — Transfer  Agent  and  Registrar,  42 — Corporation 
Reorganization,  43 — ^Fidelity  and  Title  Insurance,  44 — Safe  Deposit 
i^isiness,  4.5 — 'Superiority  of  Trust  Companies  in  Trust  Caj)acities, 
t") — Banks  and  Trust  Companies  Compared,  47 — MiMtllaneous  F'unc- 
tions,  .51 — Sources  of  Earning  Power,  .52 — Still  in  I'ormativc  Pe- 
riod, .53. 

CHAPTER  III. 

rilE  OIKiANIZATION  OF  TRUST  COMPANIES,  pp.  .54-73. 

Elements  Contributing  to  Success,  54— Preliminary  Steps,  .5.5 — Incor- 
))oration  in  New  York,  5o — By-laws,  o8 — Selection  of  Directors,  66 — 
Special  Charters,  68. 

CHAPTER  IV.  .     * 

TRUST  COMPANY  LEGISLATION,  pp.  71-89. 

Progress  of  Legislation,  74 — Directors,  7;5 — Capital  Stock,  7-5 — Pow- 
ers, 76 — Powers  in  New  York,  77 — Trustee  Powers,  79 — Holdings  of 
Real  Estate,  80 — Au.xiliary  Powers,  81 — Banking  Powers,  81  —  Reg- 
ulation, 83 — Double  Liability.  8r.— Deposit  with  State.  8.5  — Restric- 
tio!is  on  Loans,  86 — Reserves.  8()      Reports  and   l'N,iiiiiiiati<uis.  88. 

CHAPTER  /  . 
SI  MMAin    Ol'  STAI'I',   AND   Ti:  H  in  r(  )|{  I  A  I .    I    \\\S    HI.I.ATINd 
TO  TRUST  CO.MrANIi.S.  pp.  90-I61. 
Alabama.   90 — .Arizona.   ;il       .\ik.iiisas.   .Ol       (  ali  I  ..riiii.   .OJ      ('m|(.i;h|m. 
.93 — Connecticut,  9."'— Delaw.are,  96 — District  of  Columbia.  97— Flor- 


VI  TABLE  OF  CONTENTS. 

ida,  98— Georgia,  98— Hawaii,  .9.9— Idalio,  100— Illinois,  1 02— Indi- 
ana, 103— loM'a,  104— Kansas,  lO.-j- Kentucky,  106— Louisiana,  107— 
Maine,  109— Maryland,  1 1 1— Massachusetts,  11 1— Michigan,  US- 
Minnesota,  116— Mississippi,  117— Missouri,  119— Montana,  ISO- 
Nebraska,  122— Nevada,  122— New  Hampshire,  122— New  Jersey, 
12g— New  Mexico,  126— New  York,  128— North  Carolina,  133- North 
Dakota,  13i— Ohio,  136— Oklahoma,  138— Oregon,  141— Pennsyl- 
vania, 142— Rhode  Island,  144— South  Carolina,  146— South  Dakota, 
146— Tennessee,  148— Texas,  149— Utah,  151— Vermont,  152— Vir- 
ginia, 154— Washington,  155— West  Virginia,  157— Wisconsin,  159 
— Wyoming,  160. 

CHAPTER  VI. 
ORGANIZATION  OF  THE  WORKING  FORCE,  pp.  162-171. 

Diversity  in  Organizations,  162— Duties  of  the  Various  Officers,  162— 
Managing  Officer,  163— Chart  of  Working  Force,  164— Duties  of  / 
Various  Officers  and  Employees  Banking  Department,  165— Work  of 
the  Trust  Department,  1 68— Real  Estate  Department,  170— Safe 
Deposit  Department,  170— Bond  Department,  1 70— Advertising  De- 
partment, 170— Auditor,  171— Attorney,  171. 

CHAPTER  VII. 

FORMS  AND  RECORDS  FOR  THE  TRUST  DEPARTMENT  nn 

172-233.  ' 


ion 


Accounting  System,  172— Loose-leaf  Books  and  Cards,  173— Relatiui. 
of  Trust  and  General  Books,  174— Trust  Register,  175— Journals  and 
Ledgers,  182— Corporations  Division  of  Department,  185— Estates 
Division  of  Department,  190— Sundry  Forms  Corporations  Division, 
199— Forms  for  Transfer  of  Stock,  203— Forms  for  Bond  Trusts,  209 
— Cou])ons,  215— Sundry  Forms  Estates  Division,  220— Record  of 
Securities,  220— Real  Estate  Record,  224— Insurance  Record,  225— 
Rents,   226— Tax-book,   227— Vouchers,   229— Statements   of  Account, 

CHAPTER  VIII. 

FORMS  AND   RECORDS   FOR  THE   SAFE   DEPOSIT  DEPART- 
MENT, pp.  234-248. 
Identifying  Customers,  234— Appointment  of  Deputies,  236— Joint 
Tenants,    237— Renting-H^   Corporations,    238— Cash    Records,    240— 
Ledgers,  240— Visitors'  Register,  243— The  Storage  Department,  244 
— Rules,  246. 

CHAPTER  IX. 

FORMS  AND  RECORDS  FOR  THE  BANKING  DEPARTMENT 

pp.  249-339. 

Progress,  249— Labor  Saving,  249— Forms  for  Use  of  Customers,  250 

y      —Pass-books,    252— Voucher    checks,    255— Tellers'    Records,    260— 

Proofs,  260— The  Individual  Books,  265-Boston  Ledger,  267— Short 


TABLE  OF  CONTENTS.  vii 

Cuts,  273— Interest  on  Balances,  276— Statements  of  Account  280— 
Stop-payments,  282-Tl.e  General -Books,  28.S-Boston  Ledier  for 
General  Accounts,  289-The  Loan  Dej^artment,  292— Loan  I  edgers 
297-Collateral  Loans,  298— Mortgage  Loans,  303— Miscellaneous 
Loan  Forms,  312— Bills  Discounted,  31  7— Investment  Records  321  — 
Clearing  Checks,  324-Collections,  325-Letters  of  Remittance'  326- 
Official  Checks,  327— Drafts  on  Banks,  330— Certificates  of  Depo'sit 
330— Certified  Checks,  332— Record  of  Expenses,  33t— Records  of" 
Supply  Department,  337, 

CHAPTER  X 

FORMS  AND  RECORDS  FOR  THE  SAVINGS  DEP  VRTMEXT  „„ 
340-355.  '"   '  '  '  ■ 

Opening  an  account,  340-Signature  cards  and  identification.  311- 
Joint  accounts,  342— Society  and  corporation  accounts,  343— Chang- 
ing accounts,  344— Pass-books,  344— Deposit  slips,  345— Withdrawals 
and  checks,  345-Notices  of  withdrawal,  347-Journals,  348-Proof 
of  postings,  349— Ledgers,  350— Card  ledgers,  351— Daily  trial  bal- 
ance, SoS — Lost  pass-books,  S55. 

CHAPTER  XL 

FORMS  AND  RECORDS  FOR  THE  REAL  ESTATE  DEPART- 
MENT, pp.  356-368. 
Work  of  the  department,  356-Equipment,  358-Listing  and  indexing 
properties,  owners  and  tenants,  359-Report  and  memora.uhun  of  sale 
302-Renting  property,  363-Receipts  for  rent,  364-Statement  of 
rents,  306-Tickler,  366-Methods  of  accounting,  366-Rent  books, 

CHAPTER  XII. 
THE  TITLE  INSURANCE  DEPARTMENT,  pp.  369-378. 

Character  of  the  business,  369-Equipment,  370-Application  for 
tit  e  insurance,  371-Form  of  the  policy,  372-Conditions  of  ti^a 
policy,  373— Insuring  an  assignee,  375— Extension  of  policv,  37i- 
Release  of  claim,  377-PoIicy  register,  377-Value  of  title  i^suraiX, 
378. 

CHAPTER  XIII. 
METHODS  OF  INCREASING  BUSINESS,  pp.  379-394. 

Reasons  Why  a  Trust  Company  Should  Advertise,  379— Kinds  of  Ad- 
vertising, 380— Management,  380— Planning  a  Campaign,  382— Me- 
diums, 383— Newspapers,  383— Circulars  and  Booklets,  384— Letters 
38o— Other  Mediums,  386— Personal  Eflorts,  387— ..udits  and  Ex- 
aminations, 388-Treatment  of  Customers.  388-Increasing  Trust  Bus- 
iness, 389-Preparation  of  Advertising  Copy,  392-Tvpographical 
Make-up,  394.  ^      ^     ^ 


viii  TABLE  OF  CONTENTS. 

CHAPTER  XIV. 

EXAMINATIONS,    AUDITS    AND    OTHER    MEANS    OF    SAFE- 
GUARDING THE  BUSINESS,  pp.  39;>iOk 

Tlie  Parties  Interested,  395 — Accounting  and  Administration,  395 — 
Purposes  of  Audits,  39() — Examinations  by  State  Officials,  Commit- 
tees of  Directors,  Stockliolders,  etc.,  397 — The  Audit  Department,  399 
— Selection  and  Treatment  of  Employees,  400 — Qualifications  of  Em- 
ployees, 402. 

CHAPTER  XV. 

SUNDRY  TOPICS,  pp.  405-412. 

Fees,  Problem  of  Determining,  405 — Fees  as  Executor,  etc.,  406 — As 
Assignee  and  Receiver,  407 — As  Trustee  Under  Bond  Issue,  407 — As 
Transfer  Agent,  408 — Foreign  Exchange,  408 — Time  and  Labor  Sav- 
ing Devices,  408 — Branch  Banking,  409 — Offices  and  Buildings,  410 — 
Exclusive  Buildings,  411. 

CHAPTER  XVI. 

THE  DUTIES  AND  LIABILITIES  OF  TRUST  COMPANIES 
ACTING  IN  VARIOUS  CAPACITIES,  pp.  413-443. 
Transfer  Agent,  Duties  of,  413 — Liabilities,  415 — Liabilities  of  a  Cor- 
poration Acting  as  Its  Own  Transfer  Agent,  41 6 — Responsibility  of 
Separate  Transfer  Agent,  418 — Methods  of  Safeguarding  the  Trans-  / 
fer  Agent,  421 — Rules  for  Stock  Transfers,  422 — Duties  and  Liabili- 
ties of  the  Registrar,  425 — Trustee  Under  Bond  Issues,  428 — Condi- 
tions in  Trust  Deed,  429 — Papers  Required  in  Assuming  Trust,  433 — 
The  Payment  of  Coupons,  436— Escrows,  437 — Depositary  Under 
Plans  of  Reorganization,  437— Executor  or  Administrator,  438 — Trus- 
tee, 440— Guardian,  Conservaior,  etc.,  441 — The  Investment  of  Trust 
Funds,  442. 

CHAPTER  XVII. 

TRUST  COMPANIES  OUTSIDE  OF  THE  UNITED  STATES,  pp. 
444-456. 
Germs  of  the  Idea  in  India  and  South  Africa,  444 — The  Australian  ^ 
Trustee  Company,  444 — Statistics  of  Australian  Companies,  446 — 
Powers,  447 — The  New  Zealand  Public  Trust  Office,  449 — Canadian 
Trust  Companies,  451 — Cuba,  Mexico,  453 — Argentine  Republic,  454 
— Japan,  454 — England  and  Scotland,  455 — European  Countries,  456. 

BIBLIOGRAPHY,  pp.  457-466. 

Books  and  Pamphlets  Relating  Directly  to  Trust  Companies,  457 — 
Proceedings,  Reports  and  Periodicals,  4r)8 — Articles  in  Periodicals,  460 
— Banking,  Technical  and  General,  463. 

GENERAL  INDEX,  p.  467. 
INDEX  TO  FORMS,  p.  476. 


UNIVERSITY 

Of 


TRUST    COMPANIES. 


crr.iPTFR  f. 

HISTORY   OF   THE   TRUST   COMPANY  MOVEMENT  IN   THE 
UNITED  STATES. 

THK  term  "trust  company"  has  not  in  the  past  been  one  whose 
meaning  was  clearly  defined;  nor  is  it  at  the  present  day  so  used 
as  to  admit  of  a  definition  that  is  both  brief  and  accurate.  This 
doubtless  results,  in  part,  from  the  fact  that  the  trust  comp.uij[^i8  an  \ 
institution  whose  characteristics  have  gradually  developed  in  accordance/ 
with  the  needs  of  the  time  and  of  the  community;  and  in  part  because) 
cencerns  doing  widely  ditferent  kinds  of  business  have  found  it  of  ad-l 
v.-ntage  to  adopt  the  name  "trust  company,"  and  to  incorporate  undei^ 
the  laws  governing  such  companies.  Even  salary-loan  concerns  and 
pawnbrokers  have  made  use  of  the  name,  and  numerous  abuses  have  led 
several  of  the  States  to  pass  laws  prohibiting  the  use  of  the  word  "trust" 
in  titles,  except  by  direct  authority.' 

DiVFRsiTV  or-  TinsT  Company  Fl'nctioxs. 

Among  tlie  fifteen  or  sixteen  hundred  trust  companies  now  (19'>8) 
existing  in  the  United  States,  a  careful  analysis  of  the  business  actually 
done  would  show  that  the  term  is  applied  to  corporations  whose  functions 
vary  greatly.  Some  }»re  simply  banks  of  deposit  and  discount;  many  are; 
savings  banks;  some  are  safe-deposit  comj)anies;  some  are  title-insurance 
or  fidelity-insurance  companies;  some  serve  chiefly  as  fiscal  agents  for  ' 
corporations,  and  as  registrars,  transfer  agents,  intermediaries  in  reor- 
ganizations, promoters,  etc. ;  some  devote  themselves  to  the  care  of  estates 
and  to  services  as  executors,  administrators,  guardians,  trustees,  etc. 
Most  companies  combine  two  or  more  of  these  classes  of  functions,  while 
a  few  undertake  nearly  all  of  them.  In  early  years  the  life  insurance 
and   trust  businesses  were  intimately  associated. 

Thus  it  is  evident  that  in  tracing  the  development  of  trust  companies 
we  shall  find  ourselves  treating  of  institutions  which,  under  the  same 
general  name,  have  j)erformed  functions  of  various  kinds.  Statistics  of 
any  sort  regarding  trust  companies  are  difficult  to  obtain,  and  none  can 
be  had  which  distinguish  between  the  different  classes  of  companies  using 
that  name.  There  is  no  availal)le  information  showing  how  many  of  the' 
trust  companies  are  doing  a  trust  busin»ss  properly  so-called,  as  distin- 
guished from  ordinary  savings  or  commercial  banking.  It  is  also  to  be 
observed  that  some  of  the  functions  which  are  coming  to  he  ncognizvd 
as  distinctively  those  of  the  trust  company  have  always  been  carried  on 
to  some  extent  by  banks. 

1  This   was  done   in   New   York   in    1900. 

1 


2  TRUST    COMPANIES. 

Whaljias  been  ^sjiid  refers  to  the  use  of  the  term  by  those  who  are  to 
sone  tle^rec,  a^.-le^isi^f  iowversant  with  its  true  or  usual  meaning.  The 
gemral  jiuljlie,  iij.stjll  fuvioHlsij'  ignorant  of  the  signification  of  the  name; 
ai>a»Ji>GT*cdi&le':as,ijt.ui''lvS*'t^«i,  many  intelligent  people  even  confuse  the 
trust  company  with  the  "trust." 

A  ludicrous  instance  of  this  was  reported  at  the  meeting  of  the  Ameri- 
can Bankers'  Association  in  18.Q7.  "In  response  to  a  request  addressed 
to  the  Secretary  of  State  for  each  State,  for  a  certified  copy  of  the  laws 
relating  to  trust  companies,  about  half  a  dozen  secretaries  transmitted 
copies  of  the  laws  regulating,  restricting  or  prohibiting  j)Ools,  trusts, 
unlawful  combinations  and  conspiracies  in  restraint  of  trade.  The  copies 
of  these  laws  were  returned  with  an  explanation  that  it  was  the  statutes 
relating  to  trust  companies  which  act  as  trustee,  executor,  etc.,  which 
were  desired.  In  one  case,  the  Attorney-General,  to  whom  the  letter  was 
referred,  replied  that  he  regretted  misreading  the  first  letter  on  the  sub- 
ject,'but  after  a  thorough  search  he  was  convinced  that  there  were  no 
statutes  of  his  State  relating  to  trust  companies,  and  that,  as  far  as  he 
could  learn,  there  were  no  trust  companies  doing  business  in  his  State, 
except  the  Standard  Oil  Co."- 

Education  on  the  subject  has  evidently  been  going  on,  for  the  writer 
has  had  no  trouble  in  getting  satisfactory  replies  from  officials  of  all 
the  States. 

In  the  following  paees  the  writer  has  aimed  to  keep  in  mind,  when- 
ever possible,  the  distinction  between  the  trust  company  proper  and  the 
ordinary  bank  doing  business  under  the  name  "trust  company;"  but  the 
reader  is  remmded  that,  in  the  statistics  particularly,  it  is  not  possible  to 
follow  out  the  distinction.  The  reader  will  also  observe  that  in  our  day 
the  trust  company  has,  in  most  States,  so  far  entered  into  the  field  of 
the  ordinary  bank,  that  a  proper  definition  would  assign  to  it  both  bank- 
-ng  and  trust  functions. 

Both  the  name  trust  company  and  the  idea  of  its  typical  functions; 
have  been  known  since  early  in  the  nineteenth  century.  It  was  not  sup/ 
posed,  hoM'ever,  that  these  functions  were  of  sufficient  importance  to 
establish  a  distinct  class  of  companies  for  their  performance,  nor  did  the 
trust  company  as  an  institution  attract  general  attention  until  well  along 
in  the  last  quarter  of  the  century. 

TiiK  First  Grant  of  Trust  Company  Powers. 

The  earliest  instance  of  a  company  chartered  with  power  to  perform    1 
trust  business  was  that  of  the  Farmers'  Fire  Insurance  and  Loan  Com- 
pany, whicli   was   incorporated  by  the    Legislature   of   New   York,   Feb- 
ruary 28,   1822.'      The  act  states  that  certain  persons   "Associated   as   a 

2  Paper  by  Ralph  Stone  on  "Statutes  of  the  Several  States  Relating-  to  Trust 
Companies."     Proceedings   American    Bankers'    Association.    1897,    p.    15S. 

3  For  the  facts  stated  regarding  the  early  history  of  this  companv.'see  Cator- 
Irust    Companies   in   the    United   States,"   pp.    67-72;     and     Proc.    Anier.    Bankers' 


HISTORY    OF    TRUST    COMPANY    MOVEMENT.  3 

company  uii<'.tr  the-  name  ot  tlu-  Eaniitrs'  Eire  Insiiiancc  and  Loan  Coin- 
l)any,  as  well  for  tlu-  purpose  of  acconunodating  the  citizens  of  the  State 
residing  in  the  cnnitry  with  loans  on  the  security  of  their  property 
(which  cannot  now  be  obtained  without  great  difficulty)  as  to  insure 
llieir  buildings  and  effects,  and  those  of  other  persons,  by  loss  from  fire, 
and  also  for  such  other  useful  purposes  as  are  hereafter  specifi«-d,  have 
prayed  the  Legislature  for  a  charter  of  incorporation,  to  be  l«)cated  in 
tlie  City  of  New  York,  which  it  is  reasonable  to  grant."  The  company 
had  an  authorized  cai)ital  of  ^f^I  ,5(U1,00(),  but  was  i)ermitted  to  begin  with 
.$,■)()(),()()().  It  was  empowered  to  loan  upoFi  farms,  houses,  factories  or 
real  estate;  but  mortgaged  property  taken  on  foreclosure  could  not  be 
held  longer  than  five  years,  on  penalty  of  b«'ing  forfeited  to  the  people 
of  the  vStati'.  The  company  was  authorized  to  grant  annuities;  to  insure 
all  kinds  of  property  against  loss  or  damage  by  Hre;  to  purchase  and 
hold  any  stock  or  foreign  debt,  or  the  stock  of  any  corporation.  It  was 
especially  provid«'d  that  nothing  in  the  act  should  ht'  so  construed  as  to 
authori/,c  the  said  corporation  to  receive  any  deposit  or  deposits,  or  to 
discount  any  promissory  note,  bond,  due-bill,  draft  or  bill  of  exchange, 
"nor  shall  it  be  so  construed  as  to  allow  any  banking  privileges  or  busi- 
ness whatever." 

Two  months  later — April  17,  182'2 — the  same  Legislature  passed 
another  act  providing  "That  the  said  corporation  shall  also  have  au- 
thority to  receive  and  take  by  deed  or  devise  any  cfl'ects  and  j)roperty, 
both  real  and  personal,  which  may  be  left  or  conveyed  to  them  in  trust; 
and  to  assume,  perform  and  execute  any  trust  which  has  been  or  which 
may  be  created  or  declared  by  any  deed  or  devise  as  aforesaid;  and  the 
said  corporation  are  authorized  to  receive,  take,  possess,  and  stand  seized 
of,  and  to  execute  any  and  all  such  trust  or  trusts  in  their  cor|)or.ite 
capacity  and  name,  m  the  sam<'  manner  and  to  the  same  extent  as  trustee 
or  trustees  might  or  oould  lawfully  do.  and  no  further." 

There  appears  no  reason  to  question  the  statement  of  the  company 
that  this  was  the  earliest  bestowal  of  such  ])owers  upon  any  corporation 
in  the  United  States.  It  will  be  noticed  that  the  powers  granted  are  quite 
as  broad  as  those  now  usually  given  to  cover  trustee  work,  though  the 
language  is  more  concise  .-ind  less  explicit  than  that  contained  in  most 
modern  charters.  That  the  growth  of  this  part  of  the  company's  busi- 
ness was  rapid  is  shown  by  the  fact  that  the  insurance  business, 
which  was  looked  upon  at  first  as  its  chief  field  of  operations,  soon  began 
to  be  neglected  in  favor  of  the  trust  business.  This  line  of  work,  once 
established,  grew  steadily,  and  it  M-as  finally  found  advisable  to  give  up 
the  insurance  business  altogether.  In  183()  the  name  was  changed  to 
the  Farmers'  Loan  and  Trust  Company. 

Eight    years    later — in    18:50 — another    company    was    established    in 

As.sn.,  1899,  pp.  2.">2-3.  paper  by  Fiam-is  S.  nangs.  That  the  company  performed 
trust  fimctlons  almost  from  the  beginning  la  also  attested  by  a    letter    from     tbo 

Soci.t.iiy    of    the   company. 


4  TRUST    COMPANIES. 

New  York  oitv  with  practically  the  same  powers.  This  was  the  New! 
YoTk  Lfe  Insurance  and  Trust  Company,  whose  capital  was  one  mdhon 
dllars  and  wh^'ch  was  empowered  to  write  insurance  on  lives,  and  to 
^::::  ^L  of  every  description.  For  many  y.ars  after  jtsn^orpor. 
tlon  life  insurance  was  the  most  important  ])ranch  of  its  business,  and  m 
90Vit  still  made  a  feature  of  annuities.  This  company  'has  never  had 
accounts  such  as  are  carried  by  commercial  or  savings  banks,  ts  de 
po^r  1  tust  bein,  largely  n.oneys  of  executors,  trustees,  associations, 
etc- -     it  declines  Til  corporation  business,  and  administers  only  private 

''''It' was  not  long  before  the  trust  business  took  root  and  vigorously 
developed  in  New  York's  old  rival,  Philadelphia.  Strangely  enough 
Weve'r.  the  suggestion  of  taking  up  the  new  line  of  business  came  not 
•Zn  w  Yorlfbut  from  the  far  East.  This  fact  would  seem  to  estab- 
ish  that,  however  successful  the  experiment  may  have  seemed  to  the 
Farmers'  Fire  Insurance  and  Loan  Company,  it  attracted  comparatively 
mtk  attention  among  other '  concerns  in  New  York,  and  almost  none 
ninety  miles  awayi  in  Philadelphia.  t,,  m   j  i   i  •        ..h\oh 

Gathered   in   the   Merchants'    Coffee    House   in    Philadelphia-whieh 
took  the  place  of  the  business  men's  club  of  our  d^y--/^^^^'.  "^^  ^J^ 
ber,  1809.  a   group   of  prominent  philanthropists   and  financiers   of   th^ 
Quaker  City  had  determined  upon  the  incorporation  of  a  company   foii 
he  insurance  of  lives  and  the  granting  of  annuities      Three  years^later 
on  March  10.  1812,  the  Governor  approved  the  charter,  which  had  been 
granted  by  the  Legislature  only  after  much  opposition    -^  La^er  in  the 
Tame  month  the  company   began  business  with  an  authorized  capital  of 
^500  000.     It  prospered  sufficiently  to  declare  its  first  dividend  of  tour 
p  r Int.  on  Z  capital  paid  in,  on  July  S,   1815.     Its  business  during 
hese  earlv  years,  and  up  to  18S6,  was  correctly  described  ^7  the  t.  le  of 
the  comp;nV-a  title  which  it  still  retains-the  Pennsylvania  Company 
*or  Ins-Lnce  on  Lives  and  Granting  Annuities.     In  1829  the  attention 
of  the  officers  of  the  company  was  attracted  to  a  new  line  of   business. 
"The  great  success  of  what  in  India  at  this  time  were  called  agency  houses 
was  irresistibly  drawing  the  attention  of  financiers  toward  then.     These 
were  concerns"  organized  to  l^ansact  business  for  trustees  or  individuals, 
to  receive  moneys  on  deposit  and  to  administer  estates,  and  the  ad^'ance- 
ment  of  the  Pennsylvania  Company  in  its  chosen  work  induced  ^s  officers 
to  desirp  an  expansion  in  this  new  direction."=^     On  February  4,  18. A),  the 
directors  appointed  a  committee  to  report  on  the  advisability  of  enternig 
on  "the  receipt  of  money  from  persons,  and,   in  consideration  thereof, 
carryino-  out  or  executing  such  trusts  as  the  persons   giving  the  money 
shou'ld  designate."     The  con.mittee  reported  in  favor  of  the  project,  the 
xvttorneys  to  whom  was  referred  the  legality  of  the  undertaking  gave  their 

4  Letter  fi-om   the  President  of  the  company. 

5  "Sketch  of  the  Pennsylvania  Co.  for  Insurance  on  Lives  and   Grantmg  An- 
nuities," p.  32. 


HISTORY    or    TULST    COMPANY    MOVKMKNT.  5 

approval,  and  in  Jumary.  1831,  the  ort^crrs  wirr  nnpowcrtd  to  go  ahind 
witli  the  performance  of  tlic  new  line  of  work.  But  for  some  unexplnined 
rtason  the  work  was  not  taken  up,  and  the  efforts  of  tliose  who  wished 
to  pusli  tl:.'  matter  were  not  sueeessful  until  February  '2.".,  IS'Jfi,  when 
tiie  Legislature  granted  and  the  Governor  approved  a  supplement  to  the 
eiiarter,  authorizing  the  company  to  enter  into  the  business  of  executing 
tr.ists. 

The  powers  granted  were:  To  accept  and  execut.^  trusts  of  every 
description;  to  be  appointed  trustee,  assignee,  guardian,  connnittee  or 
receiver;  to  receive  moneys  or  other  prop*  rty,  real  or  personal,  in  trust 
or  on  deposit,  to  accumidale  the  interest  thereon,  or  to  allow  and  pay  the 
same. 

As  trustee,  assignee,  etc.,  tlie  cduipany  Mas  not  re«iuir«-d  to  gi\c  bond, 
the  company's  capital  and  assets  being  taken  as  the  security  ncpiirrd  by 
Jaw.  The  charter  contained  a  provision  that  any  court  which  ajipointcd 
lie  company  to  any  trust  j)osition  might  ai)point  a  suitable  person  to 
investigate  the  affairs  and  managtm'.  nt  of  the  company:  said  j>erson  to 
report  "The  manner  in  which  its  investments  are  ma'de,  his  opinion  of 
'])o  ability  and  integrity  with  which  the  affairs  of  the  company  arc  con- 
ducted; of  the  prudence  and  safety  of  its  in\estmcnts  and  the  security 
afforded  to  those  by  whom  its  engagements  arc  held;  the  exj)ensc  of  every 
investigation  so  made  shall  be  defrayed  by  th«-  said  company."  The  pro- 
vision was  also  made  that  the  coni])any  should  pay  a  reasonable  rate  of 
interest  upon  any  sums  not  less  th.-n  one  hundred  dollars  collected  in  its 
capacity  as  trustee,  assignee,  guardian,  connnittee  or  receiver,  and  that  it 
should  accumulate  the  surplus  income  of  any  minor's  estate  by  adding 
interest  annually  on  the  whole  as  a  new  principal.  The  power  to  act  as 
executor  and  administrator  was  not  gi\(n  until  s«vent«en  y«ars  lr<ttr--in 
iS53. 

Upon  the  new  field  of  business  thus  opened  to  it.  the  contpany  en- 
tered with  vigor,  the  six  years  of  delay  in  obtaining  the  nec«-ssary  author- 
jly  seeming  to  have  prepared  the  way  for  a  rapid  accunudation  of  trust 
business.  "In  the  course  of  a  few  years  the  trust  transactions  Wcaric 
one  of  the  most  profitable  as  well  as  most  important  features  of  the  in- 
stitution, and  this  feature  forms  to-day  its  chief  business.  The  rise  of 
the  trust  department  followed  the  gradual  decline  of  the  life-insurance 
branch.  The  practical  reliniiuishment  of  this  business  became  an  advisa- 
ble policy  of  the  companv  when  the  field  was  occupied  by  the  nun^erous 
organizations  which,  in  order  to  meet  rising  and  acute  competition, 
adopted  methods  that  could  not  commend  themselves  to  a  corporation 
having  charge  of  so  large  a  nnmlx-r  of  trust  estates."'^ 

During  the  next  month  of  the  same  year  (March  17,  1S.*!C).  a  chart«r 
granting  the  same  trust  powers  was  given  to  the  Girard  Life  Insurance, 
Annuity    and    Trust    Company.      Tliis    comp.any    also   l>cgan    at    once  the 


6  "Sketch  of  the  Tennsylvanla  Co.   for  Insurance   on   Lives  and  Granting  An- 
iltles."   op.   37-3S. 


6  TRUST    COMPANIES. 

accumulation  of  trust  business,  which  increased  at  a  satisfactory  rate;'^ 
although  it  seems  not  to  have  made  this  business  its  main  feature  at  first, 
as  did  the  Pennsyhania  Company  from  this  time  on. 

The  year  1835,  then,  saw  in  active  pursuance  of  the  trust  business  in 
the  United  States  four  companies,  two  in  New  York  city  and  two  in 
Philadel))hia.  During  the  years  that  immediately  followed  and  down  to 
the  present  time,  their  business  in  the  trust  dt'])artment,  as  well  as  in  other 
lines,  has  steadily  grown,  and  they  arc  among  the  leading  companies  of 
to-day.  The  Pennsylvania  Company  had,  in  1868,  acciunulated  a  surplus 
of  profits  equal  to  its  original  capital  of  $.^500,000,  and  thereupon  in- 
creased its  capital  to  $1,000,000,  distributing  a  stock  dividend  of  100  per 
cent,  to  its  shareholders.  In  1869  its  business  was  divided  into  depart-) 
raents — the  trust  department,  the  department  of  insurance  on  lives  and/ 
granting  annuities,  and  the  baiiking  department.  But  no  life  insurance 
policies  iiavc  been  written  since  187^2,  nor  any  annuities  or  endov/ments 
jince  1873.  The  safe-deposit  department  was  added  in  1872,  in  which 
year  also  the  capital  was  increased  to  $'2,000,000.®  In  189-'5  the  com- 
pany controlled  one  hundred  and  thirty-six  millions  of  securities  held  in 
tnist,  taken  at  their  par  value,  and  received  during  the  year  more  than 
a  million  dollars  for  rentals.''  On  May  28,  1007,  it  reported  a  capital 
of  $2,000,000,  surplus  and  profits  $3,721,401,  deposits  $17,355,322.  The 
amount  of  funds  held  in  trust,  invested  and  uninvested,  was  $138,311,-125, 
besides  which  it  held  other  trusts  representing  large  amounts,  not  readily 
expressible  in  exact  figures. 

The  Girard  Company,  which  on  June  22,  1 8.Q9,  changed  its  name  to 
The  Girard  Trust  Company,  reported  on  ]\Iay  28,  1907,  capital  $2,500,- 
000,  surplus  and  profits  $9.773,80.5,  deposits  $29,976,098.  It  held  trust 
funds,  invested  and  uninvested,  amounting  to  $76,538,089,  and  the 
amount  of  trusts  under  corporation  mortgages  and  trusts  of  securities 
held  by  the  company  as  depositary  and  trustee  for  issues  of  collateral 
trust  bonds  is  given  as  $253,281,535. 

The  Farmers'  Loan  and  Trust  Company,  of  New  York,  had  on  Jan- 
uary 1,  1880,  accumulated  deposits  of  over  $6,000,000.  This  increased 
to  $24,000,000  in  1890,  and  to  $41,500,000  in  1900.  The  company's 
statement  for  August  22,  1907,  shows  capital  $1,000,000,  undivided 
profits  $6,469,185.  deposits  $81,921,575,  total  resources  $90,104,020. 

The  New  York  Life  Insurance  and  Trust  Company  had  on  August 
22,  1907,  total  resources  of  $43,240,726:  the  capital  being  $1,000,000, 
surplus  and  profits  $4,022,104,  deposits  in  trust  $33,712,743,  annuity 
fund  $2,326,150,  life  insurance  fund  $381,504.  This  company,  as 
already  stated,  has  no  deposits  other  than  trust  deposits.  . 

Of  all  the  trust  companies  now  in  existence,  these  four  were  the  only    j 
ones  which  began  business  prior  to  the  year  1853.     There  were,  however, 

7  Letter  from  the   trust  officer  of  the  company. 

8  Sketch   of  the   Pennsylvania   Company,   pp.    45,    49,    51,    52,    136,    144. 

9  Cator,   p.   75. 


HISTORY    OF    TRUST    CO.Ml'ANV    M0\I:MKNT.  7 

a  few  other  comi)aiiies  ineorpor.'ited  in  these  early  years  which  hav.-  long 
since  gone  out  of  busiruss,  and  which  bore  the  nam.-  of  trust  companies. 

The  Ohio  Life  Insurance  and  Trust  Company,  of  Cincinnati,  was 
incori)orated  February  21,  1831,  and  began  business  in  January  of  the 
foUowing  year.'''  It  had  a  trust  department  /»nd  a  banking  department. 
Its  powers  included  the  issuance  of  circulating  notes,  and  the  hading 
object  of  its  incorporation  seems  to  have  been  the  supplying  of  capital 
for  the  business  of  tlie  community.  For  many  y«ars  the  company  did 
a  large  business,  though,  on  account  of  losses,  its  dividends  wen  not  so 
great  as  had  been  hoped.  For  the  first  sevnteen  years  they  averaged 
not  quite  six  and  one-quarter  pvr  cent,  p.r  annum.  Karly  in  IS.'.-'  the 
trust  dej)artmeiit  liad  assets  of  $2,750.O()().  In  addition  the  banking 
department  liad  assets  of  over  $1,34."),0()().  The  last  years  of  this  com- 
pany were  filled  with  troubles  over  the  State  tax  question,  the  company 
being  called  ujjon  for  taxes  of  about  ii=l()(),0()0  i)er  year.  The  failure, 
wliich  occurred  August  21,  1857,  and  which  precipitated  the  panic  of 
tliat  year,  was  attributed  by  the  Presiihnt  of  the  company  to  "loans  to 
l)arties  unable  to  respond  at  this  time."'' 

The  passage  of  the  Free  Banking  law  in  New  York,  in  18.S8,  was 
followed  very  soon  (in  July,  18."8)  by  the  incorporation  of  the  Nortli 
American  Trust  and  Banking  Company,  of  New  York  city.'-  Under 
the  law,  the  company  could  di.scount  bills  and  notes  and  other  evidences 
of  debt,  and  loan  money  on  any  kind  of  security,  real  or  personal.  The 
company  had  a  brief  but  strenuous  existence.  Its  ca|)ital  "in  cash. 
bonds  and  mortgages  was  between  two  and  three  millions  of  dollars,  and 
upon  this  the  directors  and  managers  contracted  debts  and  loans  to  thf 
amount  of  $18,000,000."'  '  In  January,  1S.".9.  the  company  purchased 
$1,200,000  bonds  of  the  State  of  Indiana,  giving  its  notes  in  payment. 
It  also  bought  Ohio  State  stocks,  giving  negotiable  time  certificates  of 
deposit.  For  many  years  after  the  failure  of  the  company  the  courts 
were  occupied  with  litigation  regarding  the  legality  of  these  transactions, 
and  the  creditors  included  many  anxious  investors  on  the  other  side  of 
the  Atlantic.  Another  concern  that  passed  like  a  comet  through  the 
financial  sky  of  these  days  was  the  Kentucky  Trust  Company,  which 
failed  in  18')1,  after  a  very  brief  career.  It  had  been  chartered  with  an 
unlimited  capital. 

The  year  1853  was  marked  by  the  incorporation  of  the  first  company 
organized  in  this  country  to  transact  exclusivtly  the  business  of  a  trust 
company.  This  was  the  United  States  Trust  Coni|)any,  of  New  York  city, 
created  by  an  act  of  the  Legislature  April  12,  IS.").**.  "Its  charter  was 
the  basis  of  all  special  charters  of  a  similar  character  afterward  granted 
in  New  York,  as  well  as  of  the  general  law  for  the  incorporation  of  trust 

10  Bankers  Magazine.   July,   1S52.  Vol.  VII.   p.   74. 

11  Ibid..    September.    1857.    Vol.    XII,    p.    240. 

12  Ibid..   November.   1854.  Vol.  IX.  p.  849. 

13  Ibid..  November.  1S52.  Vol.  VII.  p.  341. 


8  TRUST    COMPANIES. 

companies;  which  was   adopted   in    1887   and   which  has  terminated   the 
granting  of  special  charters  for  such  iDurposes."-* 

This  company  has  had  an  important  place  in  financial  history  during 
its  fifty-odd  years  of  life,  and  its  list  of  directors  and  officers  has  in- 
cluded men  of  national  prominence.  During  the  last  two  years  of  the 
Civil  War,  when  the  financial  problems  of  the  Government  were  most 
serious,  John  A.  Stewart,  then  Secretary  of  the  company,  at  the  earnest 
request  of  President  Lincoln,  undertook  the  work  of  Assistant  Treasurer 
of  the  United  States  in  the  city  of  New  York.  Mr.  Stewart  became 
President  of  the  company  in  1865,  and  served  with  conspicuous  success 
until  1.903.  when  he  tendered  his  resignation.  He  was  succeeded  by  ex- 
Socretary  of  the  Treasur)"^  Lyman  J.  Gage. 

During  its  half  century  of  life,  the  company  has  paid  to  those  who 
entrusted  to  it  their  idle  moneys  for  accumulation  more  than  thirty 
millions  of  dollars  in  the  way  of  interest  on  such  funds. ^^  Its  statement 
on  July  1,  1.907,  shows  total  resources  of  $77,711,610;  capital  .$2,000,- 
000;  surplus  and  profits  $12,513,709,  and  deposits  in  trust  $61,455,947. 

In  1857  the  Merchants'  Loan  and  Trust  Company,  of  Chicago,  the 
oldest  existing  bank  in  the  State  of  Illinois,  w^as  granted  a  special  charter 
by  the  Legislature  of  that  State.  Under  this  charter  the  company  was 
authorized  tc  do  a  general  trust  as  well  as  banking  business:  but  it  did 
no  trust  business  until  about  1880,  and  did  not  make  a  specialty  of  such 
business  until  recent  years.  Its  trust  department  was  organized  in 
1901. ^^^ 

There  were  some  other  companies  with  the  word  "trust"  in  their 
titles  incorporated  in  Illinois  at  this  time  and  a  little  later,  but  they  were 
essentially  State  banks  with  a  different  name.  Among  these  were  the 
Chicago  Loan  and  Trust  Companj',  chartered  in  1857,  and  the  Real 
Estate  Loan  and  Trust  Company.     Neither  is  now  in  existence.^ '^  \ 

It  is  thus  evident  that  down  to  the  time  of  the  Civil  War  the  numberj 
of  companies  having  the  word  "trust"  in  their  titles  was  very  small,  and 
the  number  that  actually  undertook  the  trust  business  probably  did  not 
exceed  half  a  dozen.  That  there  were  not  more  trust  companies  organized  \ 
during  this  period  seems  at  first  thought  somewhat  remarkable  in  view 
of  the  success  of  the  four  companies  first  mentioned,  and  in  view  of  the 
fact  that  this  period  was  prolific  in  the  formation  of  State  banks.  Presi- 
dent Jackson's  successful  fight  against  the  second  Bank  of  the  United 
States,  followed  by  the  removal  of  the  public  deposits  to  "pet  banks," 
and  the  downfall  of  the  Government  bank,  opened  the  field  for  new 
financial  institutions.  That  field  was,  however,  almost  wholly  for  con- 
cerns that  issued  circulating  notes,  and  this  function  was  evidently  not  a 
part  of  the  business  of  insurance  companies,  which  were  at  that  time,  as 


14  Fiftieth   anniversary  circular  of  the   company,   1?03,   p.    8. 

15  Ibid.,   p.    7. 

16  Letter  from  the  Secretary  of  the  company. 

17  Cator,   p.    19. 


HISTORY    OF    TRUST    COMPANY    MOVEMENT.  9 

we  have  seen,  the  only  corporations  tnpapd  in  the  trust  business.  As 
several  recent  writers  have  pointed  out,  tlie  business  of  handling  drposits, 
which  is  now  so  important  to  most  trust  companies,  was  then  of  slight 
consequence  as  compared  with  that   of   note   issue. 

Relativf  Progress  oi-  Thist  Companies  axu  SAvi.voa  Ba.vks. 

Another  poii'.t  of  interest  in  this  connection  is  the  relative  progrcu  ' 
of  the  savings  bank  and  the  trust  company  nuivenients.  Each  had  it« 
origin  in  semi-philanthropic  effort  (as  did  jflso  the  insurance  business), 
though  doubtless  tlie  savings  bank  movement  partook  more  especially  of 
this  characteristic.  The  two  classes  of  institutions  were  established  at 
about  the  same  time,  the  first  savings  banks  in  the  United  States  having 
begun  business  in  1816— on.-  in  Philadelphia  and  one  in  Boston.  The 
growth  of  the  savings  banks,  after  the  first  few  years  of  experiment,  wa» 
rapid,  and  they  became  an  object  of  j)ublic  interest  almost  from  th« 
start.  There  were  thirty-six  savings  banks  in  the  country  in  18.S0.  with 
deposits  of  nearly  $7,000,000;  in  1833,  fifty-two  Ivinks,  with  dtposits 
of  over  $10..'?00,000:  in  ISTjO,  lOS  banks,  with  deposits  of  over  !i'4.'J,000,- 
000.  In  1885 — about  the  time  that  the  trust-company  movement  began 
in  some  earnest — there  were  6-lfi  savings  banks,  with  deposits  of  ."?1.095,- 
000,000.^^  Trust  com])anies,  on  the  other  hand,  wrre  established  half 
a  century  before  they  begati  to  attract  general  attention,  and  where  known 
at  all  in  the  early  years  the  trust  business  was  looked  upon  as  only  one 
of  the  less  important  functions  of  insurance  companies.  For  this  marked 
difference  in  the  early  history  of  the  tM-o  classes  of  institutions,  one 
explanation  suggests  itself  which  is  quite  sufficient  to  account  for  the 
difference.  It  is  that  the  savings-bank  movement  began  when  the  country 
had  reached  a  c(mdition  M-herein  its  need  was  felt,  while  the  trust  com- 
pany was  established  in  advance  of  any  recognized  need.  Indeed,  as  we 
shall  see^  the  conditions  Mhich  make  possible  that  part  of  the  trust  com- 
pany's business  M'hich  has  to  do  with  large  enterprises  of  a  corporate 
nature  have  not  existed  until  within  the  last  two  or  three  decades. 

It  will  be  interesting  to  get  an  idea  of  the  way  in  which  the  trust 
business  was  regarded  in  New  York  about  the  middle  of  the  last  century. 
In  The  Bankers  Maga/ixe  for  November,  185  J,''  there  appeared  an 
article  on  "The  Trust  f'ompanit  s  of  N«  w  York."  These  are  given  under 
three  heads,  viz. : 

1.  The  New  York  Life  Insurance  and  Trust  ("onipany. 

2.  The  United  States  Trust  Company,  of  New  York. 

3.  Life  Insurance  Companies. 

The  Farmers*  loan  and  Trust  (  ompany  is  included  with  regular  Jiie 
insurance  companies  under  the  third  head.     Of  the  United  States  Trust 


IS  Report  of  Comptroller  of  the  Currency,   1902.    p.   •120. 
19  Bankers   Magazine.   Vol.    IX.    p.   321. 


10  TRUST    COMPANIES. 

CoQiiJany.  it  is  remarked  that  it  does  no  life-insurance  business — only 
"receiving  moneys  on  deposit,  and  executing  trusts."  The  figures  are 
given  for  the  two  companies  above  named,  among  the  items  for  the  New 
York  Life  Insurance  and  Trust  Company,  being  "deposits  in  trust,  trust 
accumulation,  life  insurance,  annuity  granted,  and  receivership  account." 
After  a  description  of  the  two  companies,  the  article  proceeds:  "There 
are  other  com.panies  in  the  city  which,  if  not  strictly  termed  trust  com- 
panies, are  yet  so  in  fact,  as  they  are  the  depositories  of  funds  that  will 
not  be  demanded  for  a  long  series  of  years,  and  on  the  solvenc}'^  and 
stability  of  whose  affairs  much  depends.  We  allude  to  the  life  insur- 
ance companies." 

Organization  of  Trust  Companies  After  the  Civil  War. 

The  last  year  of  the  Civil  War  and  the  years  immediately  following 
saw  a  very  distinct  movement  toward  the  formation  of  trust  companies, 
and  marked  its  spread  into  new  territory.  Of  the  companies  now  in 
existence  over  forty  began  business  during  the  A'ears  1864-1875."'^  How- 
ever, many  of  these  companies  were  in  their  early  years  not  trust  com- 
panies, but  ordinary  banks.  The  States  represented  were  Pennsylvania, 
New  York,  New  Jersey,  Maryland,  all  the  New  England  States  except 
Maine,  Illinois,  Iowa  and  Georgia.  In  the  eight  years  following  1865 
about  thirty-seven  new  charters  were  granted  in  Pennsylvania;  very  few 
of  them,  however,  were  used.~^ 

The  Union  Trust  Company,  of  New  York,  was  chartered  in  lS6i  and 
began  its  work  in  1865;  as  did  also  The  Provident  Life  and  Trust  Com- 
pany of  Philadelphia,  both  companies  transacting  a  trust  business  from 
the  beginning.--  The  Trust  and  Deposit  Company  of  Onondaga,  at 
Syracuse,  N.  Y.,  began  business  in  1866,  undertaking  from  the  first  such 
trust  business  as  was  committed  to  it.-^  The  year  1867  saw  the  begin- 
ning of  the  Safe  Deposit  and  Trust  Company,  at  Pittsburg,  Pa.,  and  of 
the  Rhode  Island  Hospital  Trust  Company,  of  Providence,  R.  I.  One 
of  the  leading  objects  of  the  organization  of  the  latter  was  to  serve  as  a 
pecuniary  helper  to  the  Rhode  Island  Hospital,  then  in  its  infancy.  This 
company,  which  was  modeled  in  part  after  the  United  States  Trust  Com- 
pany, of  New  York,  was  given  a  threefold  character  by  its  charter: 
"First,  a  bank,  with  all  banking  powers  except  that  of  issuing  a  cur- 
rency; second,  a  savings  institution;  third,  an  incorjiorated  executor,  ad- 
ministrator and  trustee  of  the  estates  of  decedents  and  of  the  living  who 
might  desire  to  avail  of  its  services."-* 


20  See  dates  of  organization  of  the  various  companies,  given  in  "Trust  Com- 
panies of  the  United  States,"  published  by  the  V.  S.  Mortgage  and  Trust  Co.,  of 
N.   Y. 

21  Cator,    p.    16. 

22  Letters  from  the  trust  officers  of  the  companies. 

23  Letter  from  the  Secretary  of  the  company. 

24  Circular   issued   by   the   company,    giving  its   history. 


HISTORY    OF    TIUST    (OMPANV    MOVEMENT.  11 

In  18(iS  were  cliartr  red  the  Bro..kIyn  (X.  Y.)  Trust  Coinimny,  which 
-coniincnccd  a  trust  husin.ss  at  onct-;  the  W'oroesttr  Snfc-  Drposit  and 
Trust  Company,  of  Worctstor,  Mass.,  which,  however,  did  not  accept  any 
tru.st  until  1881;  and  the  Hartford  (Conn.)  Trust  Company,  which  did 
not  enter  into  a  trust  business  until  ]8<*!>.-'  AmonK  .»tln'r  companicH 
chartered  in  New  York  durinfj  the  sixties  w»re  the  Niw  York  (iuaranty 
and  Indemnity  Company,  18Cl;  the  National  Trust  Com]>any.  18(J7.  and 
the  New  York  Mercantile  and  Trust  Company.  IHdS.-"  All  three  have 
])assed  out  of  existence.  Tlie  Nortiiern  Trust  Company  of  riiiladtlphia 
was    estahlislu-d    in    1881,    transacting    trust    business    from    tin-    start.-' 

Boston  now  hecanie  interested  in  the  movement,  and  in  1871  the  New 
Fnjiland  Trust  Com))any,  which  had  been  chart«red  in  18()9,  In-^an  busi- 
ness, receiving  its  first  trust  in  May  of  that,  year.-"  The  Mass.ichusetts 
Trust  Company,  of  Boston,  chartered  in  1870.  also  began  business  in 
1871,  but  did  not  engage  actively  in  l!i<-  trust  busine-s  until  1887.-"  By 
187;>,  besides  other  conipanie:j  in  New  "^'ork,  Pennsylvania.  Connecticut 
and  Massachusetts,  there  had  begun  business  the  Camden  Safe  Deposit 
and  Trust  Comj)any,  of  Camden,  N.  J.,  which  exercised  at  once  its 
powers  to  act  as  executor,  administrator,  guardian,  agent,  etc.;  The 
Connecticut  Trust  and  Safe  Deposit  Company,  of  Hartford,  which  at 
once  undertook  trust  business;"''  and  the  Illinois  Trust  and  Savings 
Bank,  ol"  Chicago,  M-hich,  though  authorized  by  its  charter  to  accept  and 
execute  trusts,  did  not  use  such  authority  until   ISSS.  " 

Meantime  during  the  sixties  there  had  come  into  being  a  class  of  in- 
stitutions whose  business  is  now  being  taki'n  up  very  generally  by  trust 
companies — namely,  the  safe-dej)osit  comj)anies.  The  Safe  Deposit  and 
Trust  Company,  of  Baltimore.  Md..  was  organized  in  18()l  as  a  safe- 
de))osit  comjjany  only,  its  trust  business  being  taken  on  in  187(>-'^'  The 
Fidelity  Trust  Comijany,  of  Philadelphia,  was  established  in  18()()  as 
the  Fidelity  Insurance,  Trust  and  Safe  Deposit  Company.  While  this 
company  undertook  the  other  lines  of  business  indicated  in  its  title,  it 
made  a  specially  of  the  safe-deposit  business,  and  claims  to  be  the 
])ioni-er  company  in  the  country  in  this  business."-  The  Boston  Safe 
Deposit  and  Trust  Comi)any  was  organized  in  18()7  as  a  safe  deposit 
company  only;  its  name  being  changed  and  trust  functions  added  in 
1871'  and  1877.  Tjif  Bwkkhs  M  \r;.\z:NF  for  October.  18()().'^  mentions 
the  recent  organization  of  the  Safe  Deposit  Company,  of  New  York. 
AvI.ieh    by    its    eliarler    wis    restricted    to    the    safe-keeping   of    v.<iluables. 


2.5  Ive-ttors    from    offloeis    of    tlip    comp.inle.o. 

26  Rankers  Mag:azlne,  Vol.   XXIX.  i>.  6TS. 

27  Letter  from  the  Trea.«urer  of  the  company. 

2S  Letter  from    the   trust  offlcer  of   the  C'>mpany. 
20  T^etter  from  the  Secretary  of  the  company. 

30  I^nter  fiom  the  Secretary  of  the  comimny. 

31  Letter    from    the    Vice-President    of    the  compnny. 

32  Letter  from  the  Vice-President  of  the  company. 

33  nanl<ers   Magazine.   Vol.   XXI.   p.   316. 


12  TRUST    COMPANIES. 

The  renter  of  the  safe  exclusively  held  the  key.  Rents  for  the  safes 
were  $20,  $30,  $35,  $40  and  $45  per  anijum.  The  article  says:  "A 
similar  company  has  been  formed  at  Philadelpliia  and  Cincinnati,  and 
others  are  proposed  in  large  cities."  The  same  magazine  in  September, 
1871,  stated  that  there  were  many  such  companies  in  New  York,  Bos- 
ton, Philadelphia,  Hartford,  Chicago  "and  other  cities."  The  other 
cities  must  have  included  Baltimore  and  Cincinnati.  It  mentions  the 
Chicago  Fidelity  Safe  Depository,  just  established,  with  which  was  to 
be  associated  the  Guarantee  and  Investment  Association.  The  latter 
Iiad  a  fiduciary  and  an  executive  department,  and  handled  the  "manage- 
ment of  estates  and  executory  trusts."^*  Hardly  had  the  company  been 
started  when  the  great  Chicago  fire  occurred.  Its  vaults  were  un- 
harmedj  and  there  was  "not  a  paper  scorched,  or  wax  melted."^^  In  a 
list  of  five  concerns  doing  this  business  in  New  York  city  are  included 
the  National  Park  Bank  vaults,  and  the  firm  of  Ball,  Black  &  Co., 
jewelers.  The  arrangements  of  one  of  the  Philadelphia  companies  arc 
described,  and  they  show  that  this  business  was  conducted  in  most  par- 
ticulars as  it  is  now,  but  with  more  red  tape.  Accommodations  were 
made  for  ladies,  in  some  of  these  companies.  Doubtless  the  organiza- 
tion of  safe-deposit  companies  afforded  great  relief  to  the  banks,  which 
(as  is  the  ease  still  in  some  communities)  did  a  great  deal  of  safe-deposit 
work  gratuitously.  In  1873  The  Bankers  Magazine  referred  to  the 
"habit  of  leaving  bonds,  etc.,  for  safe-keeping  in  the  vaults  of  banks," 
and  added  that  ^'a  bank  is  never  paid"  for  such  services.^*'  This  is  not 
the  only  function  of  the  modern  trust  company  that  the  old-time  bank 
used  to  perform  without  charge,  and  also  without  legal  responsibility.^^ 

Fkeedman's  Savings  and  Trust  Company. 

An  account  of  the  companies  doing  business  during  this  period  would 
be  incomplete  without  reference  to  the  Freedman's  Savings  and  Trust 
Company,  although  this  was  a  savings  bank  rather  than  a  trust  company. 
This  institution  was  established  through  the  efforts  of  Charles  Sumner 
and  others,  in  1865,  as  a  measure  of  philanthropy  to  aid  the  negroes  in 
accumulating  property  for  support  in  their  newly-gained  state  of  free- 
dom. For  some  years  its  business  prospered  greatly,  and  thirty  branches 
were  established  in  the  Southern  States.  In  1870  its  charter  was  amended 
so  as  to  loosen  the  restrictions  on  its  investments ;  and  this  action,  together 
with   the   panic  of    1873,   proved  disastrous.      The   company   became   in- 


34  Ibid.,  Vol.   XXVI,   pp.   161   to  164. 

35  Ibid.,   Vol.    XXVI,   p.    632. 

36  Ibid.,  Vol.   XX\ai,   p.   S71. 

37  In  1876  a  decision  rendered  by  Justice  Allen  stated  that  National  banks 
are  not  authorized  to  receive  articles  for  safe-keeping,  and  cannot  be  held  re- 
sponsible for  same.  Bankers  Magazine,  Vol.  XXX.  pp.  222-229.  For  an  able  dis- 
cussion of  other  trust  company  functions  undertaken  by  national  banks  with- 
out legal  authority,  see  Mr.  Breckenridge  Jones'  paper  on  "The  Trust  Company — 
A    Necessity,"    in    Proceedings    Trust    Company   Section,   A.   B.    A.,   1908. 


HISTORY    or    TRLST    COMPANY    MOVKMKNT.  15 

solvent  in  July.  187i,  and  its  failure  was  tlie  source  of  great  distre^ss 
among  tlie  i)oor  negroes  wlu)  had  trusted  the  institution  fathered  by  the 
Government.  The  depositors  numbered  72.<K>').  scattered  over  thirteen 
States.  The  liabilities  at  the  time  of  failure  were  .*3.().S7.560;  the 
jimount  paid  creditors,  after  a  delay  of  several  years,  finally  amounted 
to  sixty-two  i)er  cent,  of  their  claims."" 

CoMPTKOI.I.r.Il     Kxox's     ClMTKISM     OF     SoMK     OK     TIIK     ThIST     (oMPAXIE!*. 

Among  ,other  companies  that  suspended  during  the  panic  of  18?.'^ 
were  the  Brooklyn  Trust  Company,  the  L'nion  Trust  Company,  the 
National  Trust  Company,  and  the  \\'arehouse  Security  Company,  of 
New  York.'"'  The  loose  methods  pursued  by  many  Hnancinl  institutions, 
and  the  craze  for  speculation  and  money-g«tting.  which  were  largely 
responsible  for  the  panic,  called  the  attention  of  the  Comptroller  of  the 
Currency  to  the  different  kinds  of  banking  org.mizations.  Among  these 
the  trust  companies  did  not  escape  his  attention.  In  his  report  for 
]87'5-7i  the  Comptroller  (Hon.  .John  J.  Knox)  says:*"  "Trust  and  loan 
companies  arc  usually  organizi-d,  l\v  special  State  statutes,  in  the  large 
cities.  Their  capitals,  deposits  ;ind  business  are  quite  large  in  amount. 
Reports  are  not  required,  and  inadetjuate  when  given.  For  instance, 
one  of  the  largest  of  these  institutions  has  published  but  one  re}M>rt  in 
the  year,  and  that  report  contains  only  a  st.atement  of  its  assets,  without 
any  mention  of  the  amount  due  to  its  depositors,  or  of  any  of  its  liabilities. 
The  Bank  Su])erintendent  of  New  York,  in  reply  to  an  inquiry  in  refer- 
ence to  these  institutions,  says  (under  the  date  of  Jidy  ."^l,  187."^):  'The 
trust  companies  of  New  York  are  peculiarly  situated.  Some  are  under 
the  control  of  the  Comptroller  of  the  Stat*-:  but  the  great  majority  of 
them  are  under  no  sort  of  supervision.  *  *  *  This  class  of  corpora- 
tions has  multiplied  rapidly  during  the  last  few  years.  *  *  *  I  am 
not  able  to  furnish  a  coi)y  of  the  charter  of  any  of  these  companies.'  " 
The  Comptroller  adds  that  he  had  received  .some  reports  from  trust 
companies,  but  not  enough  to  publish  without  making  the  report  "de- 
lusive." He  had  better  fortune  the  following  year,  and  statistics  of  trust 
companies  are  found  in  the  reports  from  187'>  on.  In  his  report  of 
187y-7().  the  Comptroller  .says  that  the  reports  from  Philadelphia  were 
furnished  cheerfully  by  the  officers  of  the  companies,  "although  tliey  ex- 
pressed doubt  whether  they  could  projnrly  b<-  classed  as  banking  institu- 
tions."*' If  they  are  living  now  their  doubts  are  probably  removed. 
The  Comptroller  also  says:  "Several  of  the  companies  state  that  they 
hold  very  large  values,  amounting  to  many  millions,  in  trust,  which  are 


38  Bankers   Magazine.    V.^l.    XXIX.    p.    0^6.  and  Vol.   XF.II.   p.   909;   Keyes:   Hl!«- 
tory  of   the  Savings   Banks   of   tiie   I'nlted   States.  Vol.  II.  pp.   658  et  »eq. 

39  "Commercial  and   Financial  Ciironlcle."   July   26   and    Aug.    SO.    1S7S.      Report 
of  U.    S.    Comptroller,    1S73.    p.   90. 

40  Page   XL.TII. 

41  Page  I.X. 


14  "  TRUST    COMPANIES. 

not  the  property  of  the  companies,  and  are  not,  therefore,  returned  by 
them  as  deposits  proper."  The  same  thing  is  true  to-day,  and  for  this 
reason  statistics  of  trust  companies  do  not  convey  a  correct  idea  of  the 
amount  cf  property  actually  under  their  control. 

Proposed  Public  Supervision  of  the  Companies. 

Agitation  to  bring  the  trust  companies  under  some  sort  of  supervision 
was  going  on  at  this  time  in  several  States.  The  Bank  Commissioners 
of  Connecticut,  in  their  report  for  1S72,  recommended  that  instead  of 
ihe  annual  returns  to  the  Commissioners  then  required,  there  be  quar- 
terly reports,  and  that  same  be  published  in  the  newspapers.*-  Such  a 
law  was  enacted  in  1872.*^  Connecticut  Iiad  live  trust  conqjanies  at  the 
beginning  of  that  year. 

The  Superintendent  of  Banking  of  New  York,  in  his  report  of  De- 
liember,  187?,  recommended  that  the  trust  companies  be  brought  under  | 
stricter  State  supervision.  At  this  time  some  of  them  were  under  no 
supervision  at  all,  while  some  reported  either  to  the  State  Comptroller, 
the  Superintendent,  or  to  a  Judge  of  the  Supreme  Court. ^*  The  Super- 
intendent's recommendation  was  adopted,  and  the  companies  were  brought 
under  his  supervision  in  1874'. 

Competition  Between  Trust  Companies  and  Banks. 

Evidences  that  trust  companies  were  now  beginning  to  attract  some 
attention  from  the  general  public,  and  to  cause  considerable  uneasiness, 
among  other  classes  of  bankers,  is  found  also  in  the  increasing  number 
of  comments  upon  them  in  the  financial  papers  as  well  as  in  the  Reports 
of  the  Comptroller  of  the  Currency.  In  The  Bankers  Magazine  for 
January,  1874,*'^  is  found  this  statement  regarding  "Trust  and  Loan 
Companies":  "They  were  intended  as  repositories  for  trust  funds,  for 
the  accumulation  of  deposits  to  be  loaned  on  mortgage,  and  for  invest- 
ments in  Government  loans;  in  other  words,  as  savings  banks  on  a  large 
scale.  Recenth'  they  have  been  converted  into  stock-jobbing  concerns,, 
apparently  for  the  benefit  of  stock  operators,  and  in  large  sums."  The 
article  refers  to  the  remarks  of  the  Comptroller  of  the  Currency  in  his 
Report  for  1873  (p.  XLIII)  already  quoted.  Two  years  later  (April, 
1876),  the  same  magazine  has  this  to  say:*"  "Recent  events  have  led  to 
some  solicitude  in  regard  to  trust  companies  in  this  State,  and  the  re- 
ports of  these  institutions  have  been  scrutinized  with  unusual  interest." 
On  January  20,  1883,  the  "Commercial  and  Financial  Chronicle"  said:*^ 
"An  important  feature  in  our  financial  situation  is  the  rapid  extent  dur- 


42  Bankers    Magazine,    Vol.    XXVII,    p.  256. 

43  Ibid.,    Vol.    XXVIII,    p.    184. 

44  Ca.tor,    p.    51. 

45  Bankers  Magazine,   Vol.   XXVIII,    p.    520. 

46  Ibid.,   Vol.   XXX,    p.    777. 

47  Vol.   XXXVI,    p.   917. 


HISTORY    OF    TRL'ST    COMI'ANV    MOVK.MKN  J  .  13 

ing  late  years  of  tlu-  husiiuss  of  tlu-  trust  companies  of  this  State.  Not 
very  long  ago  their  position  was  what  their  nauu-  implies— that  i«,  in- 
stitutions for  safely  keeping  and  managing  trust  funds.  More  recently 
Ihey  have  been  running  into  a  general  hanking  business,  and  now  hold 
a  position  not  very  unlike  the  joint-stoek  hanks  of  London,  which  take 
deposits  on  interest,  loan  them  out  as  best  they  can,  while  leaving  to  the 
liank  of  England  the  burden  of  carrying  the  reser\e.  In  a  similar  man- 
ner the  trust  companies  are  dependent  upon  the  resi-rve  of  the  associated 
banks,  while  becoming  active  competitors  for  general  deposits,  v<ry  large 
lenders  of  funds  on  collateral  securities  and  the  leading  buvers  of  pa|xr 
in  the  market.  *  *■  *  If  the  future  growth  of  these  trust  com- 
panies is  to  be  measured  by  the  i)ast  growth,  it  will  not  be  long  before 
ihey  will  carry  deposits  one-half  or  two-thirds  as  large  as  the  banks." 
Two  years  later^"*  the  same  periodical,  referring  to  the  Report  of  the 
New  York  Superintendent  of  Banking,  remarked:  "He  says  the  number 
of  trust  companies  has  increased  beyond  the  wants  of  the  State,  and  .1 
general  law  will  l>c  a  benefit,  by  helijing  to  check  their  multiplication.  In 
all  this  the  Superintendent  only  gives  expression  of  the  pr«vailing  opin- 
ion. Trust  companies  are  needful,  but  only  for  certain  well-defined  pur- 
poses; they  are  misnamed  and  in  some  cases  mishading  when,  in  the 
garb  of  a  trust  organization,  they  exercise  the  powers  of  a  bank." 

Steady  Devei.opn!i:xt  of  the  Trirsx  Companies, 

Notwitiistanding  many  such  coinjilaints  a>i  th«  se.  the  trust  company 
movement  went  steadily  forward,  and  encroached  more  and  more  upon 
the  field  of  the  regular  banks.  To  do  this  they  had  to  overcome  not 
only  the  hostile  criticisms  of  the  financial  press,  but  the  force  of  State 
legislation  as  well.  In  Pennsylvania,  for  example,  the  amendment  to 
the  Corporation  Act  in  18S1,""'  forbids  trust  companies  to  do  a  banking 
business.  For  many  years  the  question  was  under  discussion,  whether 
Pennsylvania  trust  companies  might  legally  reeeive  demand  deposits.  As 
late  as  1898  the  Law  Editor  of  The  Bankehs  Magazine  expressed  the 
opinion  that  it  was  not  legal  for  them  to  do  so.""  The  companies  actually 
did  receive  such  deposits,  however;  and  in  IPOO  their  right  to  do  so  was 
established  by  decision  of  the  United  States  Circuit  Court  of  Pennsyl- 
vania.'' It  is  still  illegal  for  Pennsylvania  trust  companies  to  discount 
commercial  paper.,  but  they  may  buy  it ! 

Another  instance  of  encroachment  upon  the  functions  of  banks  in 
spite  of  questioned  legality  is  furnished  by  the  Missouri  trust  com- 
panies. In  1891  the  Supreme  Court  of  Missouri  decided  that  trust  com- 
panies  are    not   hanks,   and    may   not    ree«  ive   deposits   as   banks. ^-      This 


48  January  10.  1SS5.     Vol.  XU  p.   42. 

49  Laws  of  Pennsylvania,   May  24.   ISSl.     Act   26,  sec.   1 

50  Bankers   Magrazlne.   Vol.    L.V1,   p.   100. 

51  Cator.   p.   IS.     Bankers  Magrazlne.   Vol.  LXJI.   p.   561. 

52  Bankers   Magazine.    Vol.    L,    p.    60. 


16  TRUST    COMPANIES. 

failed  to  settle  the  matter,  however.  Four  years  later  the  same  court 
passed  upon  the  question  again,  and  concluded  that  trust  companies  may 
not  receive  demand  deposits,  unless  they  pay  interestJ'^  Hence  the  re- 
ceiving of  demand  deposits  by  trust  companies  in  that  State  now  has 
legal  sanction.  No  rate  being  specified  by  the  court,  the  payment  of 
merely  nominal  interest  would  suffice,  so  far  as  the  law  is  concerned. 
There  is  a  law  of  competition,  however,  which  is  another  thing. 

The  examples  just  related  illustrate  how  the  trust  company,  unlike 
the  National  bank,  has  develoined  according  to  natural  rather  than  arti- 
ficial laws.  The  law  and  its  interpretation  have  been  moulded  to  suit  the 
ascertained  needs  of  the  business,  instead  of  the  business  being  moulded 
to  conform  to  the  law.  There  are  those  who  believe  that  this  process 
has  evolved  a  more  scientific  system  of  banking  than  that  of  the  banks 
themselves. 

General  Statutes  Re(?ulating  Trust  CoxMpanies. 

During  the  decade  of  the  eighties  the  growing  attention  to  the  trust 
company  as  an  institution  was  further  evidenced  in  some  of  the  States 
by  the  passage^^  of  general  laws  regarding  this  class  of  institutions. 
New  York  passed  such  a  law  in  1887,  since  which  time  companies  have 
usually  been  incorporated  under  the  general  law,  altliough  some  have 
been  organized  under  special  acts.'^^  We  have  already  referred  to  the 
Corporation  Act  of  1881  in  Pennsylvania,  which  dealt  with  trust  com- 
panies. It  was  further  amended  in  1885.^"  Illinois  passed  a  trust  com- 
pany law  in  1887.^^  Several  States  passed  laws  during  this  period  for 
the  purpose  of  regulating  or  restricting  the  business  of  trust  companies. 
This  subject  will  be  discussed  more  at  length  in  a  subsequent  chapter. 

Growth  of  the  Companies  in  Numkers  and  Resources. 

Returning  now  to  the  consideration  of  the  growth  of  trust  companies 
in  number  and  resources,  the  task  is  much  simplified  by  the  availability 
of  statistics  which,  while  incomplete,  furnish  the  means  of  forming  a 
tolerably  accurate  idea  of  the  progress  of  these  institutions. 

From  the  year  1875  on,  the  reports  of  the  Comptroller  of  the  Cur- 
rency give  statistics  of  the  trust  companies  reporting  to  that  official. 
These  reports  do  not  include  all  of  the  trust  companies  in  existence  at 
their  several  dates,  as  the  Comptroller  had  no  authority  to  compel  the 
sending  of  returns  from  State  institutions.  The  number  of  companies 
reported  for  the  year  ended  June  30,  l%"5,  was  thirty-five.     This  num- 


53  Ibid.,   Vol.   LrVII,   p.   16. 

54  The  tendency  to  the  passage  of  general  laws  was  not  confined  to  trust 
companies,  however,  but  extended  to  other  State  banking  institutions.  See  "State 
Banking  in  the  United  States,"  by  George  E.  Barnett,  p.   22  and  passim. 

55  Circular  published  In  1900  by  the  New  York  Superintendent  of  Banks,  giv- 
ing historical  sketch  and  digest  of  banking  laws. 

56  Act  of  June  11,   1885. 

57  Aot  of  June  15,  1887. 


HISTORY    or    TRUST    CO.MPANV    .MOXKMENT.  l? 

ber  is,  of  course,  somewhat  less  than  the  nmnher  actuallv  doing  business, 
and  it  is  impossible  to  learn  the  exact  number.  The  L'nited  States 
Mortgage  and  Trust  Company,  of  New  York,  has  annual) v.  since  \i)iiS, 
published  a  book  entitled  "Trust  Companies  of  the  United  States."  whicli 
gives  complete  returns  from  practically  all  of  the  trust  companies  tn  ex- 
istence, with  the  dates  of  their  organizations.  An  examination  of  this 
Aork  shows  that  of  the  companies  reported,  Hftv  had  been  organized 
during  or  before  the  year  187.5.  But,  as  the  writer  has  ascertainrd  bv 
correspondence  with  these  companies,  some  of  them  were  not  organized 
■at  first  as  tru.st  companies.  On  the  other  hand,  as  already  .shown,  a 
nimiber  of  trust  companies  organized  in  these  early  years  have  gone  into 
liquidation,  and  their  names  do  not  appear  in  the  book  above  mentioned. 
A  rough  estimate,  however,  shows  that  these  two  considerations  alxjut 
offset  each  other,  and  the  numlier  of  companies  in  existence  in  187.'»  was 
probably  nearer  fifty  than  thirty  five.  The  former  numlur  is  insignifi- 
cant enough  as  compared  with  the  other  financial  institutions  at  that 
time.  As  against  the  thirty-five  trust  companies,  there  were  in  1S7.'>, 
ficcordiug  to  the  Report  of  the  Comjitroller  of  the  Currency  for  that 
vear,  551  State  banks,  771  Savings  banks  and  '2.087  National  Iwinks. 
The  trust  companies  liad  deposits  of  $85,000,000.  while  the  State  banks 
had  $1()6.000.()00.  the  Savings  banks  6^921,000,000  and  the  National 
banks  $679..000,000. 

Of  the  thirty- five  trust  companies  reportid.  N«w  York  State  had 
tvvelve,  Connecticut  ten,  Pennsylvania  seven,  .Massachusetts  five  and 
Rhode  Island  one.  The  incompleteness  of  this  list  is  shown  by  the  fact 
mentioned  by  the  Comptroller,  that  while  Illinois  is  credited  with  no 
companies  in  the  list,  the  Financial  Editor  of  the  "'Chicago  Tribune" 
reported  that  there  were  in  Chicago,  June  SO,  187.'),  five  trust  companies, 
witb  aggregate  deposits  of  $.5,688,5 7 i.'^* 

A  general  idea  of  the  growth  of  trust  companies  from  this  time  on 
will  be  gained  most  easily  by  reference  to  the  charts  presented  herewith. 
Chart  A  is  designed  to  show  the  growth  in  the  numln-r  of  trust  companies 
year  by  year.  The  heavy  line  follows  the  number  of  companies  in  ex- 
istence each  year  as  reported  by  the  Comptroller  of  the  Currency.  The 
dotted  line  follows  the  total  number  of  companies  organized  at  the  close 
of  each  j'ear,  as  shown  by  figures  compiled  by  the  writer  from  the  work 
"Trust  Companies  of  the  United  States,  l.OO.*^,"  already  mentioned.  The 
heavy  line  shoMs  less  than  the  actual  number  of  companies  in  existence 
at  any  given  time;  because,  as  already  stated,  the  reports  of  the  Comp- 
troller do  not  contain  complete  reports  of  all  the  trust  companies  in  the 
country.  It  is  probable,  however,  that  this  line  does  indicate  pretty  ac- 
curately the  relative  gain,  from  year  to  year,  in  the  numUr  of  com- 
panies; and  this  is  the  essential  thing  that  the  chart  is  intended  to  show. 
It  will  be  noticed  that   the  general  trend  of  the  two  lines   is  the  same. 


•"•?  Report  of  I'.   S-   Comptroller.   1S75.   p.  Xi'VIf. 


18 


TRUST    COMPANIES. 


The  heavy  line  shows  interruptions  in  tlie  increase  of  the  number  of  com- 
panies, in  the  years  1889,  1892,  1894,  1897  and  1898.  For  details  of 
this  kind,  however,  it  is  not  safe  to  trust  the  chart,  owing  to  the  incom- 
pleteness of  the  statistics  on  which  it  is  based.  The  dotted  line  shows 
that  tfiere  was  no  year  since  1881  in  which  no  new  companies  were  or- 
ganized. This  line  would  show  no  interruptions  in  the  increase  of  com- 
panies, if  there  were  any,  because  it  is  based  on  figures  showing  only 
the  number  of  companies  organized  in  each  year,  taking  no  account  of 
companies  which  ceased  to  exist.  Following  the  general  trend  of  the 
lines,  and  averaging  their  courses,  it  will  be  seen  that  there  was  no 
marked  change  in  the  number  of  companies  until  about  1885,  when  there 
began  an  increase  which  reached  its  climax  about  1891.  From  1891  to 
the  beginning  of  1 899  the  increase  went  on,  but  at  a  less  rapid  rate.  From 
1899  to  1907  inclusive,  excepting  the  years  1903,  1904  and  1906,  the  in- 


CHAPT  A,   Bhowlne  C^owth  In  tho  nuntor  of  Tmst  ConpenleB.  1B76 
AB  reportai  by  the  Cooptroller  of  tho  Currenor,  


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HISTOUY    OF    TRLST    (OMl'ANV    MOVKMKNT.  19 

crease  has  been  at  a  vrry  imicli  i^rtattT  rat«-  than  in  any  of  thr  preceding 
years.  It  seems  probable  that  the  considerable  increases  in  tlie  heavy 
line  in  1888  and  1898  are  due  not  to  an  actual  increase  in  the  number  of 
companies  existing  so  much  as  to  greater  success  on  the  part  o(  the 
Comptroller  in  getting  reports  from  companies  which  had  not  hitherto 
reported. 

The  following  tabh-  shows  the  nuinb<  r  of  eonipanies  at  the  dates 
given: 

•^                                                                             According  to  AccordInK  to 

Comptroller's  "TrnHt  <"omi>anl<"»  of  the 

Year.                                                                Reports.  rnltt-d  Btiitoii." 

1875     :{5  50 

1880     30  54 

18S5     40  99 

1890     H9  255 

1895     242  364 

1900     290  518 

1905     6f>3  1156 

1907     794  14«0 

190S    • "=12  1470 

The  striking  thing  about  the  table  is  the  rnnarkable  growth  in  the 
number  of  com})anies  since  the  year  1  <)()(».  ^^■hile  the  nmnln'r  of  com- 
panies doubled  between  1890  and  1900,  in  the  se\en  years  1900-1907 
the  number  increased  50  \,  or  about  171  per  cent.,  according  to  th«- 
Comptroller's  figures,  and  9(V-';  or  about  1  S(j  per  cent.,  according  to  the 
other  authority. 

The  figures  for  190S  relleet  the  effects  of  the  paTiic  of  1907.  which 
put  an  abrupt  stoj)  to  the  organization  of  new  comp.inies.  and  caused  the 
liquidation  of  a  number  of  old  ones. 

Chart  B  shows  the  growth  of  individual  deposits  of  trust  com- 
panies, and  also  of  Savings  banks,  .State  banks  and  National  banks. 
Following  the  course  of  the  heavy  line,  which  shows  the  increase  of 
trust  coinjjany  deposits,  we  find  nmch  the  same  g«  neral  features  as  in 
the  line  showing  the  growth  in  the  nmnber  of  companies,  save  that  there 
is  a  considerable  gain  from  1S80  to  1885.  Especially  n).irkid  is  tin  in- 
crease from  1898  to   1<)0'2.  inclusive. 

COMI'AKATIVK      GilOW  III      OV      HwKS      AN))     Till  ST     CoMI'ANIKS. 

An  interesting  thing  is  the  coineidenee  in  the  general  features  of  the 
lines  showing  deposits  of  trust  companies  and  of  State  banks.  It  is  also 
to  be  noted  that  from  1897  all  four  classes  of  financial  institutions  had 
increases  of  deposits  much  greater  than  » v«r  U-fore.  This  does  not  seem 
to  corrolxirate  the  popular  impressitm  that  tlte  trust  companies  are 
making  their  gains  by  t.iking  l)usiness  from  the  regidar  banks.  It  rather 
indicat«s  that  the  trust  companies  are  sharing  with  the  others  in  a  gen- 
eral prosperity  that  is  unprecdented. 

The  following  table  gives  the  individual  deposits  of  the  same  four 
classes  of  institutions  for  the  years  named,  as  reported  by  the  Comp- 
troller of  the  Currenev: 


20  TRUST    COMPANIES. 

Trust  State  Savings  National 

Tear.  Companies.  Banks.  Banlts.  Banks. 

1875  $85,000,000  $166,000,000  $924,000,000  $679,000,000 

1880  90,000,000  209,000,000  819,000,000  888,000,000 

1885  188,000,000  344,000,000  1,095.000,000  1,117,000,000 

1890  336,000,000  553.000,000  1,525.000,000  1,594,000,000 

1895  547.000,000  712,000,000  1,811.000,000  1,715,000.000 

1900  1,028,000.000  1,267,000.000  2,450,000,000  2,602,000,000 

1905  1,980,000,000  2.365,000.000  3,093,000,000  ,               3,882.000.000 

1907  2.061.000,000  3.068,000.000  3.495.000,000  '               4,480,000,000 

1908  1.8-67,000,000  2,937,000,000  3,479,000.000  4,375,000,000 

It  tliiis  appears  that  during  the  ten  years  from  ISPO  to  IPOO,  the 
Trust  Companies  gained  in  individual  deposits  $692,000,000,  or  about 
206  per  cent.;  the  State  Banlcs,  $71 '^,000,000,  or  about  129  per  cent.; 
the  Savings  Banks,  $92.5,000,000,  or  about  Gl  per  cent.,  and  the  Na- 
tional Banks,  $1,008,000,000  or  about  6S  per  cent.  The  amount  of  the 
gain  for  Trust  Companies  was  less  than  that  for  the  other  classes  of 
institutions,  but  the  percentage  of  gain  was  much  larger. 

During  the  seven  years  from  1900  to  1907,  the  gains  were,  for 
Trust  Companies,  $1,033,000,000,  or  about  100  per  cent.;  for  State 
Banks,  $1,801,000,000,  or  142  per  cent.;  for  Savings  Banks,  $1,045,- 
000,000,  or  43  per  cent.,  and  for  National  Banks,  $1,878,000,000,  or  72 
per  cent.  During  these  years,  therefore,  the  amount  of  gain  in  dollars 
was  less  for  Trust  Companies  than  for  any  of  the  other  classes,  while 
tlie  percentage  of  gain  was  greater  than  that  of  any  but  the  State 
Banks,  which  made  ^v  remarkable  gain. 

The  figures  for  1908  show  that  all  the  institutions  lo.st  in  deposits 
during  the  panic  of  1907,  but  the  tru.st  companies  lost  most  heavily. 

As  regards  a  comparison  of  the  figures  for  Trust  Companies  and  for 
the  other  fin.ancial  institutions  named,  it  is  important  to  bear  in  mind 
that  the  reports  of  the  Comptroller  give  the  statistics  for  all  National 
banks,  and  that  said  reports  are  fairly  complete  for  State  Banks  and  for 
Savings  Banks ;  while  tlie  statistics  for  Trust  Companies  are  very  far 
from  complete.  Thus,  the  Comptroller's  report  for  1907  gives  the  total 
resources  of  the  Trust  Companies  of  the  country  as  3,073  millions, 
whereas  the  figure  given  by  "Trust  Companies  of  the  United  States"  is 
4,285  millions.  The  Comptroller's  report  for  1907  contains  figures  for 
but  one  Western  State, — Kfinsas,  and  for  but  one  Southern  State, — 
Kentucky.  It  omits  a  number  of  important  Trust  Company  States, 
among  which  are  California  and  Ohio,  tlie  combined  resources  of  whose 
Trust  Companies  in  1907  were  not  less  than  324  millions.  This  incom- 
pleteness is  not  the  fault  of  the  Comptroller,  but  is  due  to  the  fact  that 
he  has  no  authoritj^  to  compel  the  making  of  reports  of  Trust  Com- 
pany statistics  by  the  different  States. ^^ 


59  As  another  Instance  of  incompleteness,  take  the  Report  for  1897.  Two 
hundred  and  fifty-one  companies  are  reported,  with  total  deposits  of  $566,922,205. 
But  the  Comptroller  calls  attention  to  an  investigation  made  by  the  New  York 
Financier  of  returns  nearest  to  January  1,  1897.  showing  458  companies,  with  de- 
posit's   of    $675,100,000.      (See   Comptroller's   Report    1897.    page   XXXVIII.) 


HISTORY    or    TRL'ST    COMPANY    MOVEMENT 


21 


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If  tlic  reports  gave  returns  from  all  Trust  Conipnnirs  of  thr  country, 
the  above  figures  for  amount  of  gain  in  deposits  would,  of  course,  be 
increased.  AVhat  the  etiect  would  Ix-  iipon  the  percentage  of  gain  is  un- 
certain. 

The  growth  of  deposits  of  all  the  financial  institutions  was  checked 
in  1903,  but  the  chart  shows  that  according  to  the  C  omptrollcr's  figiJrcs 


22 


TRUST    COMPANIES. 


the  Trust  Companies  suffered  the  most.  Their  growth  also  appears  to 
have  been  checked  during  the  years  1906  and  1.907.  The  chart  does  not 
show  the  effect  upon  deposits  of  the  panic  of  the  Fall  of  1907,  as  the 
statistics  are  based  on  reports  made  during  the  Summer  of  1907. 

BANK    AND    TRUST   COMPANY   SUSPENSIONS,   1S93-1907. 

(Figures    furnished    by    Bradstreet's.) 

NUMBER    OF     COMPANIES     SUSPENDED. 


Loan 

National 

State 

Savings 

Private 

and  Trust 

Year. 

Banks. 

Banks. 

Banks. 

Banks. 

Companies. 

Totals 

1893    . . . 

..    154 

184 

50 

196 

14 

598 

1894     ... 

..      24 

36 

8 

18 

3 

89 

1895     ... 

..      21 

57 

18 

37 

2 

135 

1896    .... 

..       42 

65 

20 

62 

8 

197 

1S97     ... 

..      21 

24 

17 

41 

2 

105 

1898     .... 

4 

12 

5 

28 

2 

51 

1899     .... 

7 

5 

5 

18 

2 

37 

1900     .... 

..        3 

8 

2 

30 

43 

1901     ... 

5 

13 

6 

32 

56 

1902    .... 

8 

3 

16 

2 

29 

1903     .... 

..      11 

28 

1 

44 

6 

90 

1904    .... 

..       16 

23 

10 

43 

4 

96 

1905     

..      15 

14 

5 

25 

4 

63 

1906     .... 

..4 

19 

2 

17 

3 

45 

1907     

.  .      14 

28 

6 

24 

17 

89 

Totals 

341 

524 

158 

631 

69 

1723 

BANK    AND   TRUST    COMPANY   SUSPENSIONS.    1893-1907. 

(Figures    furnished    by   Bradstreet's.) 

INDICATED   TOTAL.  ASSETS. 


National 

State 

Savings 

Private 

Loan  &  Trust 

Year. 

Banks. 

Banks. 

Banks. 

Banks, 

Companies. 

Totals. 

1893     .. 

$84,493,433 

$43,168,979 

$18,763,938 

$23,497,164 

$14,357,500 

$184,281,014 

1894     .. 

3.485.650 

2,773,724 

3,029,508 

1.186,750 

510,000 

10,985,632 

1895     .  . 

3.17*.S94 

3,891,852 

10,161.649 

1,510.000 

155.000 

18,891,395 

1896     .  . 

22,951.523 

7,521,269 

8,119.000 

5,024,040 

3,892,279 

47,508,111 

1897     .. 

6,721,000 

2,401.150 

3,867,098 

2,369.714 

375.000 

15,733,962 

1898     .  . 

2,701,680 

1,791,100 

1,196,300 

1,555,254 

5.074,486 

12,318,820 

1899     .  . 

9.822,222 

168,000 

821,332 

1.893.072 

4.778.000 

17,482,626 

1900     . . 

1,025.000 

1,131,396 

381,000 

1,373,114 

3.910.510 

1901     .. 

4,753,105 

1,312,000 

596,000 

3,537,880 

10,198,985 

1902     .  . 

348,000 

2,908,012 

597,709 

28,765 

3,882,486 

1903     .. 

8,"5'37.907 

2,187,391 

35,000 

3,732,557 

12,764,000 

27,256.855 

1904     . . 

6,392,424 

2,939.855 

1,578,068 

3.498.700 

1,523,575 

15.932.622 

1905     . . 

6,639,000 

1,365,100 

2,028,776 

2.015,920 

6,390,055 

19,438,860 

1906     .. 

1,705,000 

2,768,815 

25,000 

4,075,320 

4,490,000 

13,064,135 

1907     .. 

42,522,429 

19,678.339 

7,191,686 
$60,702,367 

14,879.942 

104,192.210 

188,464,606 

Totals 

!;204, 923,267 

$93,446,970 

$70,747,145 

$158,530,870 

$588,350,619 

ESTIMATED    LIABILITIES. 

1893     .. 

$68,687,994 

$38,138,323 

$18,152,136 

$22,929,225 

.$22,388,000 

$170,295,678 

1894     . . 

4,315,900 

3,484,600 

3.445.000 

1,712,450 

1,012.000 

13.969,950 

1895     .. 

3.971.462 

4,922,631 

11,167.887 

2.537,718 

165,000 

22,764,698 

1896     . . 

27,544.250 

9,933,742 

8,457,000 

6,654.670 

4,089,372 

56,679.034 

1897     .. 

7,920.999 

3,060.811 

5,077.222 

4,085,477 

550.000 

20,694.500 

1898     .. 

2.962,863 

2,479,000 

1.331,627 

2.822,890 

6,401.412 

15,997,792 

1899     . . 

12,094,572 

215,000 

1,322,737 

4,847.261 

6.025,000 

24,504,570 

1900     .. 

1,965,304 

1,475,855 

462,649 

4,683,660 

8,587,468 

1901     .. 

5,684,720 

1,984,053 

792,725 

7.161.339 

15.622.837 

1902     . . 

825.542 

3,821,762 

1,709.773 

"51,661 

6.408,738 

1903     .. 

9,'445.i99 

2.746,533 

235,000 

7.286,777 

14.438.168 

34,151,677 

1904     .. 

7.767,4^4 

4,362.442 

1,972,000 

5,481.200 

2,756,300 

22.339,366 

1905     . . 

9,260.277 

2.209,887 

2.613,776 

3,089,423 

6.846.377 

24,019.740 

1906     . . 

2,829,000 

5,457,503 

45.000 

6,822,952 

7,725.000 

22,879,455 

1907     .. 

39,201,694 

19,852,940 

6,674,071 
$65,570,592 

22,199,622 

118,338,036 

206.266,363 

Totals    i 

203,651.658  $101,148,862 

$104,024,437 

$190,786,326 

$665,181,875 

HISTORY    Ol     TRLST    COMl'ANV    MOVEMENT.  23 

Faim-hes  or  Thl'st  CoMivwirs. 

Statistics  retrardiiif;  failures  and  susiK-nsions  of  trnst  couipaiiir*  are 
not  obtainable  prior  to  the  year  18<J.'i,  that  b.-ing  the  year  in  which  such 
rej)orts  were  begun  l)y  tlie  Bradstreet  Conipany.  The  accompanying 
tables,  furnished  to  the  writer  through  the  courtesy  of  Erank  Greene, 
Managing  Editor  of  "Bradstreet's".  show  th«-  number  of  suspensions  re- 
ported, and  tlie  estimated  assets  and  liabiliti«s  involved  therein  for  the 
years   1893-1907  inclusive. 

As  to  the  number  of  failures,  the  table  shows  that  during  the  fifteen 
years  there  were  l,7'-23  suspensions,  of  which  the  National  bank.s  con- 
tributed 341,  the  State  banks  .0'24,  the  savings  b.uiks  l.')S.  the  private 
banks  631  and  the  "loan  and  trust  com|)anies"  ()[).  It  thus  appears  that 
the  average  number  of  suspensions  ])er  anmnii  for  the  diflVrent  classes 
of  institutions  was  as   follows: — 

National  banks    '^•2  7-10 

State    banks     .'{ ") 

Savings    banks     1"M; 

Private   banks    ii 

Loan  and  trust  companies 4  (J- 10 

It  will  be  seen  from  this  that  the  number  of  trust  companies  sus- ; 
pendcd  was  small  in  comparison  with  the  number  of  other  banks  su.s- 
pended.  It  is  also  of  course  true  that  there  were  not  so  many  trust  com- 
panies in  operation  as  tliere  were  of  the  other  classes  of  banks.  Accord- 
ing to  the  best  figures  obtainable,  the  average  numlx  r  of  the  different 
classes  of  institutions  that  were  doing  business  during  the  fifteen  years 
covered  by  the  table  was  alxiut  as  follows:— National  banks.  4. 187; 
State  banks,  5.376:  Savings  banks.  1.084;  Loan  and  trust  companies,  7.'»0. 
On  this  basis,  the  percentage  of  failures  (or  the  ratio  of  the  numb«T  of 
companies  failing  to  the  number  of  com})anies  in  business'),  was  .ilwut  as 
follows : — 

National   banks    '  j   of    I    per  cent. 

State  banks    h'.'.-ioo  of   1    per  cent. 

Savings    banks     .07-100  of    1    i)er  cent. 

Loan  and  trust  companies    <>1-100  of    1    per  cent. 

From  these  figures,  it  appears  that  tlit  proportionate  numlH-r  of  trust 
company  suspensions  was  less  tliaii  lliat  of  any  class  of  financial  institu- 
tions except  the   National  banks. 

Regarding  the  losses  involved  in  the  failures,  the  showing  of  the 
trust  companies  is,  on  the  face  of  the  figures,  not  so  gcwd,  tlie  losses  as- 
signed to  tb.em  exceeding  those  of  the  other  institutions,  exctpt  the  private 
banks.  The  figures  represent,  however,  not  the  ultimate  losses,  but  the 
best  estimates  of  the  ])robable  results  obtainable  at  the  time.  An  ex- 
a:iiination   of   the   figures   for  the  year   lf)07.   which    account    for  6i    per 


24  TRUST    COMPANIES. 

centum  of  the  entire  estimated  liabilities  for  the  tifteen  years,  shows  that 
they  give  a  greatly  exaggerated  idea  of  the  actual  losses  involved.  Of 
the  17  trust  companies  reported  siispended  in  1907,  at  this  date  (Norem- 
her,  1908)  about  one-half  have  re-opened  for  business,  while  several 
others  are  being  liquidated  without  loss  to  depositors.  These  include  the 
larger  companies  which  suspended,  with  one  exception.  A-s  to  the  fig- 
ures involved,  three  companies, — tlie  Knickerbocker  Trust  Company  of 
New  York,  the  Union  Trust  Company  of  Providence  and  the  California 
Safe  Deposit  and  Trust  Company  of  San  Francisco, — account  for  con- 
siderably over  $100,000,000  of  the  $118,000,000  liabilities  shown  in  the 
table,  and  the  first  two  of  these  have  long  since  resumed  business  and  are 
lo-day  prospering,  no  loss  to  depositoro  having  resulted.  One  competent 
authorit}^  estimates  the  actual  losses  due  to  failures  of  trust  companies 
during  the  year  following  the  panic  of  1907  at  about  five  and  one-half 
million  dollars,  of  which  eight}'  per  centum  was  due  to  the  failure  of  one 
company, — the  California  Safe  Deposit  and  Trust  Company. 

New  York  having  been  the  storm  center  of  the  panic  of  1907,  it  is 
significant  that  on  August  10,  1908,  the  Superintendent  of  Banking  of 
the  State  of  New  York,  Clark  Williams,  reported — "So  far  as  the  records 
of  this  Department  are  concerned,  we  know  of  no  case  of  a  failure  of  a 
trust  company  resulting  in  loss  to  the  depositors."* 

So  far  as  the  safety  of  trust  funds  is  concerned,  the  statement  made 
some  years  ago  at  a  meeting  of  the  Trust  Company  Section  of  the  Ameri- 
can Bankers'  Association,  that  not  a  dollar  of  trust  funds  has  ever  been 
lost  through  a  trust  company,  has  never  been  disputed,  so  far  as  the 
writer  knows. 

Especial  interest  attaches  to  the  record  of  trust  companies  during  and 
since  the  panic  of  1907,  because  it  was  the  first  severe  strain  that  has 
been  undergone  by  these  institutions  since  their  great  development  began. 
On  the  whole,  the  record  must  be  pronounced  very  satisfactory.  Al- 
though subjected  to  a  strain  that  was  unprecedented,  their  record  com- 
pares favorably  with  that  of  other  classes  of  financial  institutions.  The 
failures  which  occurred  were  in  no  sense  ascribable  to  any  inherent 
vreakness  in  the  trust  company  as  an  institution;  but  are  accounted  for  in 
some  cases  by  the  dishonesty  of  ofiicials  and  by  undue  laxity  of  the  State 
laws  under  which  ihcj  operated,  and  in  others  by  pressure  of  circum- 
stances which  could  not  be  overcome  by  any  kind  of  banking  institution. 
The  same  causes  brought  about  the  doAvnfall  of  other  financial  institu- 
tions, including  National  banks,  and  State  banks  in  States  having  the  best 
laws  for  their  regulation  and  control.  The  panic  of  1907  did,  however, 
emphasize  the  necessity  of  careful  and  intelligent  State  regulation  and 
control  of  trust  companies^,  as  well  as  of  the  other  banking  institutions. 
The  statement  on  the  next  page  gives  the  aggregates  of  the  principal 
items  in  trust  company  reports  from   187')  to   1908.     This  table  contains. 


*  Trust    Companies    Magazine,    August,   190S,    p.   495. 


I. 


m 

i 
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I  S  S  =  2  i-  i  ,?  u  I  !  s 
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S  S  s  s  2  s  ;  s  s  2  I  i 


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-.  ill 


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55 


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s  R  s  s  u  s  =  rf  5  5  «  =  ft  H  a  5  ?.  5  r. 


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I  m  i  li  i  'i  iijjj  I  i  III 

1  S  I  r.  £  s  «  3  a  8  3  £  8  ^  5  5  it  I  E 
:  2  ;:  M  s  a  r.  e  K  r.  s  r.  a  s  3  s  1  I  s 

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isJi3  3  3Sftijisi  =  5H2i;?.  8s 

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siiiiniiinniiHiiH 


26 


TRUST    COMPANIES. 


data  from  Avhich  a  careful  study  may  be  made  of  various  items  of  man- 
agement as  developed  during  the  last  quarter  century.  In  the  following 
table  will  be  found  figures  dealing  with  a  few  of  the  important  sub- 
jects. 

Principal  Items  of  Resources  and  Liabilities   of  Trust   Companies, 
187:-1908. 


coo 


Cash  and 
Deposits  and    due    from 
Year,    due  to  banks.      banks. 


1875. 

1876. 
1877. 
1878. 
1879. 
1880. 
1881. 
1SS2. 
1883. 
1884. 
1885. 
1886. 
1887. 
1888. 
1889. 
ISPO. 
1891. 
1892. 
1893. 
1894. 
1895. 
1896. 
1897. 
1898. 
1899. 
190'0. 
1901. 
1902. 
1903. 
1904. 
1905. 
1906. 
1907. 
1908. 


$85,147,012 

87,969,758 

84,549,038 

73,658,004 

76,013,662 

90,158,637 

111,905,527 

144,988,775 

165.645,521 

189,507,810 

188,615,186 

214,255,658 

245,797,608 

259,925,079 

302,626,471 

339,319,740 

357,540,852 

415,431,461 

488,934,555 

478,055,823 

553,756,721 

592.617,492 

576,598,940 

665,488,712 

837.510,725 

1,031,735,272 

1.278,849,880 

1,537,476,616 

1,711,485,439 

1,775,499,356 

2,164,645,572 

2,162,228.621 

2,229,495,792 

2,029.978,992 


$10,856,621 

8,671,619 

10,826,606 

8,399,209 

8,727,670 

7,536,459 

12,454,392 

11,492,036 

13,431,867 

21,030,441 

33,499,518 

35,804,622 

35,617,727 

39,580,220 

50,320,566 

53,168,165 

56,430,480 

77,575,370 

75,568,610 

125,010,202 

128,482,531 

108,314,257 

118,139,249 

118,317,178 

154,868,308 

219,448,611 

217,207,097 

264,819,327 

304,409,977 

442,876,289 

393,880,801 

369,199,366 

368,738,970 

515,850,773 


P.c. 
10.6 
3.4 
3.3 
3.9 
3.6 
3.7 
3.9 
2.4 
2.3 
2.4 
5.3 
9.1 
6.S 
7.6 
8.3 
5.9 
4.6 
5.4 
4.5 
7.2 
6.5 
4.9 
5.1 
3.4 
2.9 
2.9 
2.0 
2.2 
3.0 
3.6 
3.1 
3.7 
4.9 
6.1 


Total 
loans. 

$65,900,174 
76,608,647 
67.946,390 
59,303,327 
61,171,877 
74,675,537 
101,906,566 
132,054,203 
140,022,358 
158,018,009 
141,542.649 
156,828,458 
196,096.830 
250.700,648 
291,450,367 
327,882,540 
356,876.320' 
385,273,548 
462,729,597 
374,421,713 
433,386,461 
462,0fl0,949 
445,629,725 
539,162,445 
599,031,033 
727,952,137 
939.768,891 
,192,488,311 
.303,237,200 
,147,'605,557 
,549,286,662 
,609,467.839 
,601,3«4.237 
,379.481,474 


Surplus  and        <-  ^ 

Total    in-  undivided  ?i  § 

vestments,      profits.  -^  ^ 


$39,409,904 

35,338,884 

37,765,945 

36,741,697 

34,841.0186 

37,654,325 

33,057,627 

42,813,068 

47,760,410 

51,250,942 

55,126,600 

71,802,374 

72,927,7412 

72,578,913 

76.725,017 

95,707,496 

93,973.321 

106,206,778 

128,824,901 

142,224,151 

177,086,555 

201,164,5S1 

201,128,020 

193,977,752 

266,086,873 

325,841,086 

396.222,854 

447,580,690 

579,459,699 

667,511,015 

787,918.435 

760,285,420 

785,999,670 

775,875,271 


$7,550,560 

8,823,200 

8,404,212 

8,616,954 

9,194.570 

10,245,051 

11,175,663 

14,212,161 

15,601,710 

19,810.611 

19,203,984 

24,520,701 

27,193,319 

35,951,687 

38,783,114 

46,828,003 

55,503.845 

'61,768,148 

70',771,477 

75,303,366 

84,801,698 

84,313,612 

89,025,267 

97,643,666 

105.616,167 

148,389,339 

168,(284,468 

225,524,514 

314,496,334 

329,789,576 

363,515,702 

395,373,620 

397,865. 0'26 

416,039,899 


$3,511,148 
3,359,110 
3,169,551 
3,166,960 
3,494,061 
4,229,889 
5,049,809 
6.093,307 
6.245,370 
6,853,477 
6.209.742 
6,626,538 
5,502,166 
3,197,112 
3,677.237 
3,381,217 
3,138,177 
3,572,886 
3.187,125 
3,148,156 
3,334.971 
3,289.547 
3,361,409 
3,831,147 
4,121,254 
4,586.760 
4.835,274 
4,755,911 
4,328.727 
4,068,868 
4,196,159 
3,988,181 
3,868.286 
3,403,376 


Reserves   of   Trust   Companies. 

Of  special  interest,  in  view  of  the  recent  agitation  of  the  question  in 
New  York  and  elsewhere,  is  the  subject  of  trust  company  reserves.  The 
third  column  of  the  table  gives  the  reserve  carried  bv  the  companies  each 
year,  the  figures  representing  the  proportions  of  the  amounts  in  the  sec- 
ond column  to  those  of  the  same  years  in  the  first  column.  From  1875 
to  1884  inclusive  the  per  cent,  of  reserve  never  exceeded  12.8,  the  lowest 
reserve  reported  being  in  1882,  when  it  was  only  7-9  per  cent.   After  1884. 


HISTORY    or    TRLST    COMPANY    MOVKMFAT.  27 

the  reserve  reported  was  materially  liierlur.  never  poiiifj  lower  than  H.^ 
per  cent,  (the  figure  for  1887),  and  reaching  its  maximum  with  26.1 
per  cent,  in  ISpt.  The  avtrage  reserve  for  the  thirt\-fi>ur  years  was 
nbout   1(5.2  jier  cent. 

The  criticisms  against  the  trust  companies  as  to  resrrvc  have,  how- 
ever, been  directed  more  especially  towards  the  amount  of  actual  cash 
carried  in  the  vaults  of  the  companies.  In  the  fourtli  column  of  the 
table  are  given  the  ))ercentages  of  such  cash  reserves  for  the  several 
years  (including  as  cash  the  amount  reported  for  cash  items)  the  figures 
representing  the  proportion  of  cash  and  cash  items  to  total  deposits. 
For  the  thirty-four  years  the  average  of  such  cash  reserve  has  Utn  a 
little  over  4.()  i)er  cent.  It  was  highest  in  187.>.  with  lO.tJ  per  cent.,  1886 
being  next,  with  9.1  per  cent.  The  lowest  percentage  was  in  1901 — 2 
per  cent.  From  187()  to  1881  inclusive  it  ranged  from  2.3  per  cent,  to 
fj.9  per  cent.  From  1885  to  18.07  it  was  somewhat  higher,  averaging 
about  6.2  per  cent.     Since  1897  it  has  axcrag.-d  .'^.1  per  ctnt. 


IXCHEASK    IX    SflU 


AND     ('nDIVII 


A  noticeable  thing  has  been  the  tendency  to  increase  in  the  Mir|iius 
and  undivided  profits  as  compared  with  the  capital.  This  has  In-en  due 
in  part  to  the  accumulation  of  earnings,  and  in  part  to  the  tendenc}' 
in  organizing  new  companies  to  have  a  large  surplus  paid  in  at  the  start. 
Most  of  the  States  that  have  any  legislation  on  the  subject  require  the 
nccunmlation  of  a  surplus  fund  until  it  reaches  a  certain  percentage  of 
the  capital  stock;  but  the  accumulation  has  gone  far  ahead  of  any  legal 
requirements.     C  hart  C  shows  the  relative  growth  of  these  two  items,  the 


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28 


TRUST    COMPANIES. 


heavy  line  rt  prcsciitinjj;  the  capital,  and  the  dotted  line  the  sum  of  sur- 
plus and  undivided  profits.  During  1899  the  latter  became  greater  than 
the  capital,  and  has  increased  in  greater  ratio  since  then. 

The  average  resources  of  the  companies  appear  to  have  been  greatest 
during  the  years  1881  to  1887.  The  writer  has  been  unable  to  find  any 
special  reason  for  this.  It  might  have  been  due  to  reports  being  received 
mainlj'^  from  the  larger  institutions.  During  the  greater  part  of  the  time 
the  resources  have  averaged  from  three  to  three  and  a  half  millions. 
From  1S99  to  1905^  inclusive,  the  averages  exceeded  four  millions. 

Statistics  of  Trust  Companies  in  the  Various  States. 

The  following  table  gives  the  numbers  and  aggregate  resources  of 
trust  companies  in  the  various  States  and  Territories  about  June  30, 
1907,  the  figures  having  been  compiled  from  "Trust  Companies  of  the 
United  States."  whose  statistics  are  the  most  complete  of  any  published, 
so  far  as  the  writer  knows.  The  list  probably  includes  nearly  all  com- 
panies in  existence  in  the  United  States  at  the  date  mentioned.  The 
reader  is  reminded,  however,  that  the  list  intends  to  include  all  institu- 
tions bearing  the  name  of  trust  companies,  and  that  many  of  them  do  a 
State  banking  business  only,  performing  no  trust  functions: 


State 
Alabama     

Number  of 
Companies. 

. ...     26 

7 

Aggregate 
Resources. 
$18,154,422.00 

2,252,618.01 
12.057.455.76 
102,632,427.65 
12,281,159.34 
26,407,379.27 

9,581,967.10 
34,316.533.95 

3.743,410.84 
14,253,128,51 

1,482,147.94 

4,914.255,76 
447,722,506.72 

3,669.877.26 
51,685,587.79 
24,404,098.14 

2,584,665.61 
29,487,555.93 
60,850,66.5.65 
36,157.238.95 
60,593.834.66 
232,820,769.51 
17,859,427.22 

4,366.740.72 

9.825.842.15 
'152.341,256.89 

9,473,079.20 

State 
Nebraska    

Number  of      Aggregate 
Companies.      Resources. 

...       8                1,202.955.0s 
7               .f;.92fi.nss  s.'? 

Arkansas    30 

California     36 

Colorado     12 

Connecticut   26 

Delaware    7 

District    Columbia       6 
Florida                     -  -        S 

New   Hampshire..       6 

New    Jersey    69 

New    Mexico    6 

New    York     S8 

North  Carolina    . .     39 

North    Dakota 3 

Ohio     .                    -     fia 

3,913.014.80 

187,379,248.50 

577.470.17 

1,443,494.569.64 

16.645,343.01 

882.438.70 

221  640  722  38 

17 

Oklahoma   

Oregon     

Pennsylvania 
Rhode  Island    . 
South    Carolina 
South    Dakota. 
Tennessee     . . . 

...        6 
...      14 
. ..   272 
...     12 
...      21 
...        9 
...     65 
. ..     43 

494.512.05 

Hawaii    

15,915,399.52 

Idaho     

...     14 

703,960,646,67 

Illinois     

64 

Indian   Territo 
Indiana     

■y-.     23 

80 

5,206,628.85 
2  193  845  99 

Iowa 

33 

42  360  785  13 

5 

28.428,542.44 

Kentucky 

. . . .     43 
....22 
35 

Utah     

3 

8.142  114  90 

Louisiana   

Maine     

Vermont     

Virginia 

...      25 
21 

21.583,144.50 
11  367  369  45 

Maryland     . . . 

Massachusetts 

Michigan     

Minnesota     . . 
Mississippi     . . 

20 

...42 
....        8 
....       5 
....      28 
....     39 

T\''ashington     . . 
West    Virginia 

Wisconsin     

AVyoming    

Total     .... 

...      19 
..      20 
...     10 
...       5 

..14S0 

25,782.492.87 

15,732.932.07 

7.977,315.82 

478.762.22 

Montana     

....       6 

$4,285,782,015.73 

It  will  be  seen  that  in  the  number  of  companies  Pennsylvania  is  far 
in  the  lead;  and  as  a  matter  of  fact,  that  State  developed  the  trust  com- 
pany mcvement  earlier  and  more  genertilly  than  an.y  other.     In  the  total 


HISTORY    OF    TRL'ST    COMPANY    MOVEMENT. 


29 


resources  of  lier  companies,  liowtver.  New  York,  which  is  second  in  the 
niunher  of  companies,  is  far  ahead  of  any  otiier  State.  The  cighty-eiglit 
companies  in  New  York  report  resources  of  $l,443,H)i,5(jt).(>+— an 
average  of  ^]6A03,Si7  per  company.  Tlie  two  hundred  and  seventy- 
two  Pennsylvania  companies  show  total  resources  of  ^TOJ.DtJO.GiG.GT,— 
en  average  of  .$2,588,0.01  per  company.  The  big  average  for  New  York 
companies  is,  of  course,  due  to  the  great  companies  of  New  York  city, 
the  largest  of  which  at  this  date,— The  Farmers'  Loan  and  Trust  Com- 
pany, which  is  also  the  oldest  trust  company  in  the  country,— had  re- 
'  sources  of  over  ninety  million  dollars. 

Trust  Co.mpaxics  iv  the  Farcer  Cities. 

The  following  table  gives  the  numbers  and  aggregate  resources  of 
the  trust  comi)anies  in  the  cities  of  the  I'nited  States  having  a  popula- 
tion of  over  50,000,  according  to  the  census  of  1<)00.  The  figures  are 
compiled  from  the  same  source  as  those  in  the  last  table,  and  are  of  the 
date  June  SO,  1907: 


Number  of 

Aggregate 

City                    Companl>^s 

Resources. 

Albany.    N.    Y 

2 

$11.18^7.828 

Allegheny.    Pa 

6 

16,592.789 

Atlanta.     Ga 

3 

4.529.597 

Baltimoie.    Md 

10 

56.607.451 

Boston.    Mass 

16 

182,577,604 

Bridgeport.    Conn.    . . 

1 

1.596.375 

Buffalo.    X.    Y 

3 

20.869.299 

Cambridge.   Ma.^js.    . . 

?. 

4.281.431 

Camden.    N.    J 

5 

12.957.296 

Charleston.    S.    C.    . . 

,'; 

2.060.010 

Chicago.    Ill 

26 

410.207,539 

Cincinnati,   O 

7 

41.055.847 

Cleveland.    O 

15 

124.758.801 

Columbus.    O 

4 

8,741,251 

Dayton,    O 

2 

4,874.775 

Denver,     Col 

5 

S.723.434 

Des  Moines.   la 

2 

4.049.3.S2 

Detroit.    Mich 

4 

15.848.997 

Eli::;ibeth.    N.    J.    ... 

1 

3.442.223 

Erie.    Pa 

2 

4.422,877 

Evansville.    Ind 

?, 

2,572.719 

Fall   River.    Mass.    .. 

1 

2.849.756 

Grand   Rapids.   Mich. 

2 

1.549.999 

Harrisburg,    Pa 

6 

11.384.954 

Hartford.    Conn.     . . . 

4 

ti. 995, 321 

India'napolis.    Ind.    . . 

7 

17.795.224 

Jersey    City,    N.    J... 

11 

40.428.338 

Kansas    City.  '  Kas. . . 

2 

1,10S.7'<1 

Kansas    City,     Mo... 

4 

14.S18.866 

Hoboken,    X.    J.     ... 

4 

23. 260.  S3 1 

1.0S    Angeles.     C'al... 

10 

31.525.805 

Louisville,     Ky 

6 

2.217,208 

Lowell,     Mass 

1 

534.120 

Lynn.     Mass 

r. 

5.399.622 

Memphis.    Tenn.     . . . 

14 

24.9S6.S44 

Milwaukee.    Wis.    ... 

,", 

4.121.7S- 

Minneapolis.   Minn... 

2 

;.si:.?;'6 

City 


Number  of 
Companies 


Xashvllle.  Tenn.  . . . 
Xew  Bedford,  Ma.>«s. 
New   Haven,    Conn  . . 

NVw  Orleans.   La 

New   York,    N.    Y 

'  Nf'wark.    N.    J 

Oakland,     Cal 

Omaha,    Neb 

Patterson,     N.     J 

Peoria.     Ill 

Philadelphia.     Pa 

Pittsburg.    Pa 

Portland.     Me 

Portland,     Ore 

Providence,    R.    I 

Reading.     Pa 

Richmond,    Va 

Rochester.    N.    Y 

St.    Joseph.    Mo.     ... 

St.    Louis.    Mo 

St.   Paul.    Minn 

Salt  I.ake  City.  Utah 
San  Antonio,  Tex... 
San    FYanclsco.    Cal. 

Savannah.     Ga.     

Scranton,    Pa 

Seattle,     Wash 

aj>rlngfleld,     Mass. . . 

Syracuse.  N.  Y 

Toledo,    O 

Trenton.    N.    J 

Troy.   N.    Y 

rtica,  N.  Y 

Wa.shlngton,  D.  C... 
Wllkosbnrre,  Pa.  ... 
Wilmington.  Del.  .. 
Worcester.    Mass.     . . 


Aggregate 

Resourr.'s. 

$7.23^.387 

1.31.-?. 126 

2.413.963 

56.1i>i(.552 

1,283.558.153 

35.605.223 

2,084.452 

416.053 

13.116.260 

2.262.931 

345.573.535 

165.190.683 

10.612.699 

H.S27.15S 

113.325.604 

*;  S4«  983 


i::.iNi.4oi 

1.54S.745 
8.142.115 
3.763.276 
4S  162  2«2 


14.695.998 


34.316.534 
S.647.S«T 
S.0S4.249 

Kl.WS.lSO 


30  TRUST    COMPANIES. 

There  are  eiglit  cities  in  the  above  list,  in  each  of  wliich  tlie  aggregate 
resources  of  the  trust  companies  exceed  one  hundred  million  dollars. 
These  are,  in  the  order  of  such  resources,  as  follows: — 

New   York    $1.2S3.55.S.153 

Chicago    410.207,539 

Philadelphia     345,573,535 

Bioston      182,577,604 

Pittsburg     165,190,683 

St.     Louis     127.181,401 

Cleveland    124.758,801 

Providence     113.325,604 

The  total  resources  of  the  trust  companies  in  these  eight  cities  is 
^2,752,373,39.0,  or  a  little  over  6i  per  cent,  of  the  total  resources  of  all 
trust  companies  in  the  country. 

Comparison   by  Groups   of   States. 

An  idea  of  the  general  distribution  of  the  trust  company  business, 
throughout  the  country  may  be  obtained  by  segregating  the  statistics  by 
groups  of  States,  as  shown  in  the  following  table: — * 

Groups  of                                         Number  of  Aggregate 

States.                                           Companies.  Resources. 

North    Atlantic    575  $2,784,291,691 

South  Atlantic    159  171,441,148 

North    Central    327  934.861,561 

South    Central    286  205,329,658 

Western  -.        133  189,858,016 

Totals     1480  $4,285,782,075 

Recapittilation. 

We  have  seen  that  the  trust  company  first  came  into  existence  in  the 
United  States  in  1822,  with  a  single  company,  which  had  no  competitors 
for  eight  years,  and  only  three  a^fter  fourteen  years.  These  early  com- 
panies combined  the  trust  business  with  the  insurance  business.  It  was 
many  years  later  before  the  formation  of  trust  companies  as  institutions 
apart  from  insurance  companies  began.  After  the  Civil  War  a  number 
of  companies  were  organized,  and  the  total  number  in  1875  was  not'far 
from  fifty.  During  the  later  eighties  a  very  distinct  movement  for  the 
formation  of  trust  companies  began,  which  was  lessened  in  degree  dur- 
ing the  early  nineties,  began  again  with  phenomenal  energy  about  1897,. 
and  has  continued  in  an  increasing  degree  since  that  year. 


*As  used  in  the  table,  the  North  Atlantic  States  comprise  Maine.  New  Hamp- 
shire, Vermont.  Massachusetts,  Rhode  Island,  Connecticut,  New  York,  New  Jer- 
sey and  Pennsylvania;  the  South  Atlantic  States.  Delaware,  Maryland,  District 
of  Columbia,  Virginia,  West  Virginia,  North  Carolina,  South  Carolina,  Georgia, 
and  Florida;  the  North  Central  States,  Ohio,  Indiana,  Illinois,  Michigan.  Wis- 
consin, Minnesota,  Iowa,  Missouri,  North  Dakota,  South  Dakota,  Nebraska  and 
Kansas;  the  South  Central  States,  Kentucky.  Tennessee,  Alabama,  Mississippi, 
Louisiana,  Texas,  Indian  Territory,  Oklahoma  and  Arkansas;  the  Western 
States,  Montana,  Wyoming,  Colorado.  New  Mexico,  Arizona,  Utah,  Nevada,  Idaho, 
Washington,    Oregon,    California    and   Hawaii. 


HISTORY    OF    TRUST    COMPANY    MONKMKNT.  31 

During  its  cnn-cr  tlic  trust  couipany  has  umlcrfjoii.-  a  radical  evolu- 
tion in  the  character  of  its  business.  To  its  original  functions  of  trustee, 
agent,  guardian,  etc.,  have  been  added  not  only  more  extensive  trust 
functions,  such  as  executor,  administrator,  Hscal  agent,  etc.,  but  other 
duties  not  contemplated  by  its  originators.  M«)st  prominent  among  these 
has  been  the  business  of  banking,  which  trust  companies  in  manv  States 
now  undertake  to  the  same  «xtent  as  do  the  State  banks  and  Savings 
banks.  The  growth  of  corporate  undertakings  has  brought  to  tin-  trust 
company  many  added  dutit  s  as  re|)resentatives  of  such  corporations  in 
various  capacities.  Since  tlic  Civil  War  many  companies  have  added 
safe-deposit  departments.  In  some  States  other  lines  of  work  have  been 
added,  including  fidelity  and  title  insurance. 

The  conspicuous  thing  about  the  development  of  the  trust  company  is 
that  it  has  been  able,  largely  through  lack  of  legislative  restrictions  and 
because  of  the  general  breadth  of  its  powers,  to  adapt  itself  to  the  par- 
ticular needs  of  the  time  and  connnunity.  When  a  new  Held  has  opened, 
it  has  been  ready  and  able  to  step  into  that  field. 

Causes  of  thk  Guo\\tii   or  Tin  st  (Omi'amks. 

Regarding  the  causes  of  growth  of  trust  companies,  the  easiest  thing 
to  say  is  also  probably  the  truest —  that  tliev  are  found  in  the  tendencies 
of  our  age  and  nation.  The  trust  company  marks  not  a  revolution,  but 
an  evolution  in  our  methods  of  handling  financial  matters,  and  we  can- 
not understand  its  development  without  taking  into  account  the  great 
changes  which  our  civilization  is  undergoing.  There  is,  to  begin  with, 
the  accumulation  of  individual  wealth — the  increase  in  the  number  of 
})ersons  and  families  having  large  interests  to  care  for.  This  is  not 
peculiar  to  the  United  States,  but  the  general  conditions  which  the  hold- 
er of  wealth  has  to  meet  here  are  quite  difl'erent  from  those  of  the  older 
countries  of  Europe,  and  make  it  of  advantage  fo  find  other  means  than 
those  used  in  Euroi)e  for  the  care  and  investment  of  great  estates.  A  still 
more  im))ortant  influence  has  been  the  tremendous  increase  in  corporate 
wealth,  both  in  number  of  cor})orations  and  in  the  amounts  under  their 
control.  Here  are  phenomena  that  are  peculiar  to  the  L'rit«d  States, 
and  peculiar  to  this  age.  Nothing  like  th«-  huge  corporations  formed  in 
recent  years  in  the  United  States  has  ever  been  known  before  since  his- 
tory began.  To  care  for  these  institutions  some  sjjccial  agency  was  need- 
ed. The  trnst  company  jirovcd  equal  to  the  emergency.  Says  one  writer: 
"Without  their  (the  trust  companies')  agency  some  of  the  transactions  in 
modern  corporate  business  would  be  both  cumbersome  and  difficult.  For 
the  success  of  schemes  of  reorganization  of  railroad  interests  and  tlie 
financing  of  vast  industrial  consolidations,  their  intervention  has  grown 
to  be  at  least  an  invaluable  convenience,  if  not  altogether  a  necessity.""' 

60  Bankers  Magazine,    Vol.    LX.    p.   2'2. 


32  TRUST    COMPANIES. 

Coincident  with  this  tendency  to  great  consolidations — whether  as 
result  or  as  cause  will  not  be  discussed  here — is  the  growing  recognition 
among  all  classes  of  people  of  the  value  of  associated  effort.  Here  again 
the  trust  company  finds  itself  in  harmony  with  the  times.  It  is  an  inter- 
mediary between  great  enterprises  and  the  groujD  of  individuals  who 
constitute  its  customers.  It  takes  the  amounts,  large  or  small,  con- 
tributed by  the  latter,  in  trust;  and  the  result  is  a  large  amount  which  it 
can  invest  in  any  corporate  undertaking  to  the  mutual  advantage  of  all 
concerned.  The  political  economist  will  not  fail  to  see  here  an  important 
service  to  the  community.  Surplus  funds,  useless  in  small  amoimts,  are 
gathered  together  and  made  to  do  service  in  enterprises  that  benefit  the 
whole  people.  At  the  same  time,  the  profits  go  to  those  who  furnish  the 
capital.  The  trust  company  is  emphatically  an  institution  of  the  people. 
As  one  writer  has  pointed  out,  it  enables  us  to  reap  most  of  the  ad- 
vantages claimed  for  community  of  ownership,  without  the  dangers  that 
would  come  with  the  systems  proposed  by  dogmatists. ^^ 

Advantages  of  the   Trust   Company  Form   of   Organization. 

Turning  to  the  specific  causes  of  growth  of  trust-  companies  as  com- 
pared with  other  financial  institutions,  various  writers  have  pointed  out 
the  advantages  which  the  trust  company  has  over  its  competitors.^^  As 
compared  with  National  banks,  and  with  some  State  banks,  it  usually  es- 
capes with  less  taxation.  It  attracts  deposits  by  paying  interest  on  them. 
A  third  cause,  and  in  the  writer's  opinion  by  far  the  most  important  one 
in  most  communities,  lies  in  the  wide  range  of  powers  which  the  trust 
company  may  exercise.  In  most  States  it  may  do  all  of  the  things  that 
an  ordinary  bank  may  do,  except  issue  notes;  and  it  performs  numerous 
duties  that  other  banks  may  not  undertake.  These  wide  powers  attract 
customers.  It  is  a  distinct  convenience  to  most  people  to  have  all  of  their 
financial  business  attended  to  under  one  roof.  The  trust  comjjany  will 
not  only  care  for  their  banking  business,  but  will  also  receive  their  valu- 
ables for  safe-keeping,  care  for  their  property,  manage  their  estates  tem- 
porarily or  permanently,  make  investments  for  them,  give  financial  and 
legal  advice,  aid  in  the  preparation  of  wills  and  execute  the  same  after 
the  decease  of  the  customer. 


61  Article  on  "The  Trust  Company,"  by  Charles  W.  Stevenson,  in  "The  Bank- 
ers' Monthly,"  Sept.,  1903,  p.  191.  Articles  by  the  same  writer  in  "The  Bankers' 
Monthly"  for  July,  August  and  October,  1903,  treat  this  phase  of  the  subject  at 
some   length. 

62  See  Bankers  Magazine,   Vol.   XLIIL,  p.  722,   and  Vol.  LVIII..   p.  505. 


CHAPTER   II. 
THE  FUNCTIONS  OF  TRUST  COMPANIES. 

THE  trust  company  of  today  jxrforms  a  j^r.at  vari.ty  of  fuiutioris, 
some  of  wliich  are  piculiar  to  itstlf,  whilr  many  are  undertaken  by 
other  financial  institutions.  The  most  distinctive  function  of  th.- 
trust  company  is  undoubtedly  that  of  acting  as  trustee  for  various  pur- 
poses. Historically,  this  was  the  first  kind  of  business,  aside  from  insur- 
ance, that  trust  companies  were  authorized  to  undertak«-,  and  the  lejfisla- 
tion  of  those  States  that  have  laws  on  the  subject  indicates  that  the  law- 
makers had  in  mind  such  business  as  atfordinj;  the  essential  reason  for  the 
chartering  of  these  comi)anies.  ^^■ith  hardly  an  exception,  the  granting  «»f 
other  powers  seems  to  have  been  intended  by  the  framers  of  the  laws  as 
merely  incidental  to  or  helpful  in  the  carrying  out  of  duties  as  trustee. 

The  Simie  intention  is  evident  in  the  name  "trust  company" — i.  e.,  a 
company  organized  to  accept  and  execute  trusts.  Welwter  defines  a  trust 
as  "something  committed  to  a  person's  care  for  use  or  management,  and 
for  which  an  account  must  be  rendered."  Blackstone  defines  it  as  mean- 
ing, in  law,  "an  estate  devised  or  granted  in  confidence  that  the  devisee  or 
grantee  shall  convey  it,  or  dispose  of  the  profits,  at  the  will  of  or  for  the 
benefit  of  another;  an  estate  held  for  the  use  of  another."  A  trustee  is  a 
person  or  corporation  to  whom  a  trust  is  committed.  With  this  in  mind, 
it  is  not  difficult  to  understand  the  theory  of  the  trust  company — simply 
a  corporation  empowered  to  undertake  those  special  trusts  of  a  business 
nature  that  men'are  apt  to  commit  to  others.  This  is  the  original  and 
essential  mission  of  the  trust  com|)any. 

Experience  has  demonstrated,  however,  that  for  the  jiroper  execution 
of  such  trusts  the  company  is  under  the  necessity  of  carrying  on  other 
lines  of  business  which  increase  its  usefulness  as  a  trustee.  Thus  one 
function  after  another  has  been  added,  until  today  the  trust  company 
undertakes  a  great  number  and  variety  of  duties  which  justify  the  de- 
scriptive name  that  has  been  ap)ilied  to  it  of  "the  department  store  of 
finance." 

Because  of  this  diversity  of  functions,  trust  eonipani«-s  usually  carry 
on  thei-r  work  in  departments,  tlu-  most  common  division  being  a  three- 
fold one — into  banking,  trust  and  safe-de|)osit  departments.  Often  the 
banking  dei)artment  is  subdivided  into  the  savings  and  the  commercial 
banking  dej^artments.  and  the  trust  department  into  two  parts,  of  which 
one  is  devoted  to  trust  business  for  corporations,  and  the  other  to  trust 
business  for  individuals.  The  largest  com}>anies  fr»'quently  have  other  de- 
partments than  these,  sometimes  In-cause  the  volume  of  business  makes  a 
further  division  advantageous,  and  sometimes  Ix-cause  other  lines  of  busi- 
ness are  included.  Among  the  other  departments  sometimes  found  are 
2 


34  TRUST    COMPANIES. 

the  bond  (or  investment)  department;  the  mortgage  department;  the 
transfer  (or  registration)  department;  the  real-estate  department;  the  re- 
organization department;  the  title-insurance  and  the  fidelity  insurance 
departments.  Most  companies  make  some  special  provisions  for  women, 
and  some  have  a  special  woman's  department. 

If  the  word  trustee  be  taken  in  its  widest  meaning,  the  greater  part 
of  the  functions  of  the  trust  company  might  be  included  in  a  description 
of  its  duties  as  trustee.  There  are  certain  forms  of  trustee  work,  how- 
ever, which  occur  so  frequently  that  they  have  come  to  be  referred  to  by 
special  names,  and  it  will  be  convenient  to  consider  the  various  functions 
in  the  following  groups: 

Business  as  trustee  or  agent  for  individuals,  under  private  agreement. 

Probate  business. 

Investment  business. 

Real  estate  business. 

Insolvency  business. 

Business  as  trustee  or  agent  for  corporations. 

Business  as  transfer  agent  and  registrar  for  corporations. 

Corporation  reorganization  and  financing. 

Fidelity  insurance  and  title  insurance. 

Safe-deposit  business. 

Savings  and  banking  business. 

Miscellaneous. 

Nature  and  Variety  of   Individual  Trusts. 

The  number  and  variety  of  trusts  undertaken  for  individuals  under 
private  agreement  are  very  great,  and  new  forms  of  such  trusts  are 
being  constantly  created.  They  come  from  many  different  classes  of 
people — from  active  business  men  who  have  some  special  matters  that 
they  do  not  care  to  handle  for  themselves ;  from  teachers,  artists,  doctors, 
clergymen,  women  and  others  who  feel  that  their  inexperience  or  lack  of 
time  makes  it  wise  to  shift  financial  affairs  to  other  shoulders;  from 
persons  whose  poor  health  requires  that  they  live  in  other  climates  and 
leave  their  business  cares  behind;  from  absentee  property  owners;  from 
the  aged,  either  too  feeble  to  attend  to  active  business  or  willing  to 
take  a  well-earned  rest;  from  persons  planning  to  spend  some  time  in 
travel  and  who  must  have  a  responsible  agent  to  look  after  their  affairs 
while  awa}';  and  from  others  who,  either  from  choice  or  from  necessity, 
wish  to  avoid  the  care  of  their  property  either  temporarily  or  perma- 
nently. 

In  such  cases  the  trust  company  takes  entire  charge  of  the  property, 
whether  real  or  personal,  or  both,  just  as  an  individual  acting  in  like 
capacity  -would  do.  It  collects  interest,  couijons,  dividends,  annuities, 
pensions,  and  any  other  form  of  income,  notes,  accounts,  bonds,  mort- 
gages, land  contracts,   etc.;   if   part  of   the   property  be   real   estate,   it 


FUNCTIONS    OF    TRUST    (OMl'ANIKS.  85 

looks  after  rtpairs  and  iiiiprovniRnts,  stcs  that  tin-  property  is  kept 
rented,  keeps  up  iiisiiranee,  pays  taxes,  eollects  rents;  it  acts  as  attorney 
in  faet,  executes  contracts,  leases,  deeds,  etc.  It  remits  or  accumulates 
the  income,  reinvests  the  ])rincij)al,  aeeordiiif;  to  th<-  t<rnis  of  the  con- 
tract. 

Married  women  place  their  separate  estates  in  the  hands  of  the  com- 
pany, eitlier  giving  it  the  sole  management  or  retaining  such  degree  of 
control  as  they  see  fit. 

It  often  happens  tliat  men  wish  to  providtt  for  wife  or  children  or 
other  dependents  a  fund  which  shall  he  heyond  the  reach  of  their  credit- 
ors and  safe  from  any  unforeseen  calamities  tliat  miglit  befall  the 
donor's  estate,  so  tliat  the  beneficiaries  may  be  assured  of  an  income  in 
any  event.  Tor  fuch  purposes  they  convey  sufficient  jiroperty  to  the  trust 
co]nj)any  as  trustee,  with  a  definite  contract  as  tt)  the  disposition  to  be 
made  of  the  jjrineipal  and  ineonu;  of  same. 

Similar  trusts  may  be  created  in  favor  of  Innevolent  or  educational 
institutions  or  others  to  whom  the  donor  wishes  to  give  the  income  only 
of  an  endowment,  without  placing  the  latter  under  the  control  of  the 
beneficiary.  The  trust  comiiany  receives  such  funds,  invests  or  reinvest* 
the  same  from  time  to  time  as  it  becomes  necessary,  and  api>lies  tlie  in- 
come as  directed  in  the  deed  of  trust. 

Trusts  may  be  created  for  the  In-nefit  of  one  making  the  trust,  either 
subject  to  his  revocation  at  any  time,  or  beyond  his  control.  The  young 
or  inexperienced  sometimes  inherit  estates,  and  suddenly  find  themselves 
in  situations  needing  experience  and  wisdom  beyond  that  which  they  pos- 
sess. Occasionally  persons  in  active  business  life  find  themselves  dis- 
qualified tlirough  accident,  sickness  or  other  cause  from  caring  for  their 
business,  and  turn  it  over  to  the  trust  company. 

Persons  whose  incomes  are  received  at  long  intervals  or  at  uncertain 
times  may  arrange  with  tlie  trust  company  to  have  the  income  paid  to 
them  in  equal  monthly  installnu  nts.  If  the  security  is  ample,  the  com- 
pany will  sometimes  make  tem})orary  advances  if  necessary. 

Trust  companies  are  sometimes  called  upon  to  act  as  agents  for  the 
payment  of  such  regul.arly  recurring  items  as  premiums  on  insurance, 
taxes,  etc.  In  some  instances  they  have  undertaken  to  care  for  burial  lots 
and   graves. 

Persons  who  are  to  be  away  for  a  considerable  time  apjioitit  tlie  com- 
pany custodian  of  valuable  papers  and  securities.  This  function  is  of 
much  greater  importance  than  mere  safe-keeping.  While  the  owner  is 
away,  it  may  be  of  tlie  greatest  imjjortnnce  to  get  at  the  papers.  Bonds 
may  be  called  for  redemption,  the  owner  may  wish  to  place  the  securi- 
ties as  collateral  for  a  loan,  eoiqions  may  become  due,  and  the  owner  need 
the  money  for  them. 

Some  trust  companies  do  a  considerable  business  in  the  handling  of 
escrows.  They  act  as  temporary  trustees  of  papers,  money  or  other 
projierty   placed   in   their  hands  by   otie   party  to   be   given   to  a   second 


OF      T^r 


36  TRUST    COMPANIES. 

party  upon  the  performance  of  a  -contract,  the  payment  of  a  certain 
sum  in  money  or  the  fulfillment  of  some  other  provision  determined  by 
the  parties  to  the  agreement. 

Sometimes  estates  which  have  been  iniprovidently  managed  are  placed 
in  the  hands  of  trust  companies  in  the  hope  that  they  may  be  freed  from 
incumbrances  and  put  upon  an  income-producing  basis.  In  some  notable 
cases  the  superior  facilities  of  trust  companies  have  enabled  them  to 
preserve  and  make  valuable  estates  that  would  have  been  worthless  in 
the  hands  of  the  owners. 

A  new  field  of  business  is  now  being  taken  up  by  the  trust  companies, 
in  the  form  of  trust  agreements  relating  to  life  insurance.  The  policies 
are  made  payable,  or  assigned,  to  the  trust  company  as  trustee,  and  at 
the  death  of  the  assured  the  company  collects  the  proceeds  of  the  poli- 
cies, of  which  it  has  meantime  been  the  custodian,  and  applies  such  pro- 
ceeds according  to  the  trust  agreement.  Many  insurance  companies  do 
not  write  policies  allowing  stated  payments  to  beneficiaries,  and  this  plan 
therefore  furnisJies  the  opportunity  not  otherwise  open  for  the  insured 
to  have  such  disposition  made  of  the  proceeds  of  his  insurance. 

Trust  agreements  are  also  made  by  which  beneficiaries  may  be  paid 
stated  annuities  out  of  the  proceeds  of  life-insurance  policies.  This  ar- 
rangement is  specially  valuable  where  a  man  is  not  able  to  carry  an 
amount  of  insurance  such  that  the  income  alone  will  support  the  family. 
The  trust  company  can  so  invest  the  proceeds  that  a  small  portion  of  the 
principal  may  be  used  each  year  while  the  balance  is  kept  profitably  in- 
vested. The  fund  may  thus  be  made  to  provide  a  suflicient  income  during 
the  probable  life  of  the  widow  or  during  the  minority  of  the  children. 
One  of  the  leading  companies  of  the  central  States  advertises  that  by 
this  plan  it  is  possible  to  pay  an  annuity  of  $500  for  forty  years  out  of 
$10,000  insurance,  of  $1,000  for  forty  years  out  of  $20,000  insurance, 
etc. 

It  is  customary  in  appointing  the  trust  company  trustee  to  have  the 
fees  of  the  company  made  a  part  of  the  contract,  and  it  may  thus  be 
known  in  advance  just  how  much  the  expense  will  be. 

While  the  trust  company  is  a  corporation,  it  has  usually  succeeded  on 
account  of  its  wide  powers  and  the  character  of  the  men  in  control  in 
maintaining  a  degree  of  personality  which  adds  to  its  attractiveness  to 
customers.  The  confidential  nature  of  many  of  its  duties  brings  it  into 
close  touch  with  those  whose  affairs  it  handles. 

It  is  customary  for  trust  companies  to  keep  all  trust  funds  entirely 
separate  from  their  general  assets;  and,  indeed,  this  is  required  by  law 
in  many  States.  This  means  that  in  case  of  the  failure  of  the  company 
the  funds  belonging  to  a  particular  trust  cannot  be  mingled  with  the 
general  assets  of  the  company  nor  levied  upon  in  any  way  by  the  credit- 
ors of  the  company.  In  addition  to  this,  the  trust  becomes,  in  case  its 
funds  are  not  intact,  a  creditor  of  the  company,  protected  as  are  its  other 
creditors  by  its  general  assets.    Trust  funds  are  thus  doubly  safeguarded. 


FUNCTIONS    OF    TRUST    COMPANIES.  37 

Securities  and  otlur  property  Iield  in  trust  stand  in  the  name  of  the 
company  as  trustee  (etc.)  for  So-and-so,  and  thus  show  on  their  face 
that  thty  are  not  the  jiroperty  of  the  company. 

Probatk    BrsiNKt-s. 

The  statutes  of  many  States  jrivc  to  trust  eompani«s  the  |)owcr  to 
accept  and  execute  duties  entrusted  to  tlum  hy  will  or  by  appointment  of 
court  as  administrator,  etc.  In  sucii  capacities  the  company  has  the  same 
powers  and  duties  that  an  individual  would  have  if  acting  in  the  same 
capacity.  The  manifest  advantages  which  the  trust  company  has  over 
an  individual  for  the  ])erf«rmance  of  such  trusts  are  sttadily  drawing  to 
it  a  large  portion  of  tiiis  business;  and  it  is  saf«-  to  prophesy  that  it  will 
ultimately  become  tlie  usual  practice  to  «iitrust  the  execution  of  wills 
and  the  administration  of  the  estates  of  tlu-  dead  to  trust  companies 
rather  than  to  individuals. 

Business  of  this  kind  includes  services  as  txecutor,  administrator, 
trustee,  guardian,  connnittee.  conservator. 

An  executor  is  a  person  appointed  by  tin-  testator  in  his  will  to  take 
charge  of  his  estate  and  dispose  of  it  as  directed  in  the  will. 

An  administrator  is  an  officer  appointed  by  the  court  having  such 
jurisdiction  in  the  several  States  to  take  charge  of  the  estate  of  one  who 
dies  without  leaving  a  will,  and  to  dispose  of  the  same  in  accordance  with 
tlic  inheritance  laws  of  the  State. 

An  administrator-with-the-will-/innexed  is  a})|K)inted  by  the  court  to 
take  charge  of  the  estate  of  a  deceased  {)erson  when  no  executor  has  been 
named  in  the  will,  or  when  the  executor  named  refuses  to  act  or  dies. 

Acting  in  any  one  of  these  capacities,  the  trust  company  assumes  en- 
tire charge  of  the  estate,  subject  to  the  supervision  of  the  court,  and  after 
a  period  varying  in  the  several  States,  but  usually  eighteen  or  twenty- 
four  months,  makes  a  final  distribution,  according  to  the  terms  of  the 
will  or  the  laws  of  inheritance,  as  the  case  may  be,  and  files  with  the 
j)roper  jiublic  official  an  itemized  statement  of  all  receipts  and  ex- 
l)enditures  under  the  trust.  In  winding  up  the  afl'airs  of  an  estate,  the 
executor  or  administrator  frequently  finds  it  necessary  to  turn  a  portion 
of  it  over  to  a  trustee  appointed  to  manage  it  for  the  beneficiaries  or  to 
a  guardian  appointed  to  look  after  the  estates  (and  in  some  States  the 
persons)  of  heirs  who  are  minors,  or  to  a  committee  or  ct»nservat<ir  ap- 
j)ointed  to  have  charge  of  an  estate  for  licirs  who  are  insane,  idiots. 
habitual  drunkards,  spendthrifts  or  incapable  for  any  reason  of  looking 
after  their  own  afl'airs.  In  any  of  thesj-  capacities  the  trust  companies 
may  act,  and  it  often  happens  that  a  given  company  acting  as  executor 
turns  over  a  part  of  the  estate  to  itself  as  trustee,  guardian,  etc.,  thus 
gaining  for  the  estate  the  advantage  of  continuous  management  by  the 
same  trustee.  It  may  also  receive  such  trusts  from  other  executors  or 
a<Iministrators.   whether   individuals   or   trust  companies. 


38  TRUST    COMPANIES. 

In  any  of  these  capacities  the  trust  company  may,  and  often  does, 
act  in  conjunction  with  individuals  appointed  to  share  the  responsibility 
with  it. 

In  probate  business  of  all  kinds  the  company  is  accountable  to  the 
court  for  the  faithful  performance  of  its  duties,  and  must  render  com- 
plete statements,  which  become  part  of  the  public  records.  The  fees  • 
charged  do  not  exceed  those  of  individuals  acting  in  similar  capacities, 
and  often  are  much  less.  The  laws  of  the  several  States  specify  the  fees 
allowed  to  executors,  administrators,  etc. 

It  is  common  practice  for  a  tru&t  company  to  tender  the  services  of 
its  officers  for  the  drawing  of  wills,  and  to  act  as  custodian  of  wills  until 
the  death  of  the  testator,  when  it  files  the  will  with  the  proper  court; 
all  these  services  being  performed  without  charge  in  cases  where  the 
company  is  appointed  executor. 

Testamentary  trusts  may  be  created  for  any  lawful  purpose.  In  act- 
ing as  trustee  under  appointment  by  will,  the  duties  of  trust  companies 
do  not  differ  materially  from  their  duties  when  acting  in  the  same 
capacity  under  appointment  by  private  agreement.  In  any  probate 
capacity  it  may  be  necessary  to  make  advances  of  money  in  order  to 
save  the  estate,  and  this  the  trust  company  will  do  if  the  circumstances 
justify  it. 

Trust  companies  are  generall}'  legal  depositaries  for  others  acting 
as  executors,  administrators,  guardians,  etc.,  and  for  court  funds. 

The  officer  making  such  deposits  with  a  trust  company  is,  in  most 
States,  relieved  from  any  responsibility  in  case  of  the  loss  of  the  funds 
through  the  failure  of  the  trust  company.  He  usually  cannot  escape  this 
responsibility  in  case  the  funds  are  in  his  own  keeping  or  deposited  with 
an  ordinary  bank. 

By  the  appointment  of  a  trust  company  as  agent  or  trustee  during 
one's  life,  and  its  selection  as  executor  and  trustee  under  will,  the  trustee 
work  of  a  family  may  be  kept  in  the  same  hands  from  generation  to 
generation. 

Investment  Business. 

In  the  performance  of  its  other  trust  work  of  various  kinds,  the 
trust  company  is  often  called  upon  to  invest  or  reinvest  trust  funds  in 
securities  that  are  safe  and  that  yield  as  great  returns  as  are  consistent 
with  safety.  In  addition  to  such  demands,  and  to  its  needs  for  the  in- 
vestment of  its  own  funds,  many  companies  find  so  great  a  field  for 
dealings  in  high-grade  securities  as  to  justify  the  establishment  of  a  bond 
or  investment  department  to  handle  such  business.  The  operations  of 
this  department,  aside  from  its  use  for  the  customers  of  the  other  de- 
partments, do  not  as  a  rule  differ  greatly  from  those  of  a  first-class  bond 
house  that  deals  exclusively  in  high-grade  securities. 

The  business  of  this  department  touches  that  of  the  trust  department 
at  many  points.     Trust  funds  must  be  invested  as  soon  as  possible  after 


FUNCTIONS    or    'J'HLSr    (O.MPAMKS.  S9 

being  received.  Reinvestments  must  be  made  from  time  to  time,  for 
mortgages  become  due  and  are  paid,  bonds  mature  or  are  called  in  for 
redemption,  and  the  funds  thus  set  free  must  not  be  allowed  to  remain  as 
mere  deposits  too  long,  although  interest  at  regular  savings  rates  is  al- 
lowed on  such  funds  during  the  interim.  The  large  trust  company  has 
excellent  facilities  for  this  service.  The  amount  of  securities  that  it 
must  purchase  for  various  interests  is  so  great  that  it  can  buy  on  the 
best  terms,  and  its  opportunities  for  accurate  and  immediate  knowledge 
of  the  securities  market  are  of  the  best.  Often  one  of  its  trust  estates 
needs  to  dispose  of  securities  at  the  same  time  that  another  needs  to  buy. 
A  large  mortgage  is  often  divided  among  several  estates. 

Special  forms  of  investment  are  provided  by  some  companies,  the 
most  common  form  being  in  the  way  of  bonds  secured  by  real  estate 
mortgages.  The  company  loans  on  mortgages,  sometimes  exclusively  on 
property  located  in  its  own  city,  sometimes  on  property  in  several  care- 
fully-selected cities.  The  amount  loaned  varies  from  forty  to  sixty  per 
cent,  of  the  appraised  value  of  the  property.  The  protection  of  title 
insurance  and  fire  insurance  policies  is  added.  The  company  then  issues 
a  series  of  bonds  secured  by  these  mortgages,  deposits  the  latter  in  trust 
with  some  other  company,  and  replaces  each  mortgage  as  it  matures  or  is 
j)aid  by  another  mortgage  for  like  amount,  keeping  the  total  of  live 
mortgages  always  equal  to  or  greater  than  the  total  of  the  series  of 
bonds.     The  bonds  usually  bear  four  per  cent,  interest. 

Instead  of  issuing  bonds,  some  companies  simply  sell  the  mortgages, 
giving  the  purchaser  the  benefit  of  the  company's  experience  and  judg- 
ment in  the  selection  of  the  mortgages,  but  assuming  no  res|)onsibility 
for  the  payment  of  same.  Such  companies  sometimes  have  allied  insti- 
tutions which  will  guarantee  the  payment  of  the  mortgages  for  a  small 
fee. 

Some  companies  haiulle  investments  for  customers  under  investment 
deposit  agreements.  The  aggregate  of  the  deposits  received  for  such 
purpose  is  invested  in  securities  selected  by  the  company's  trust  com- 
mittee, and  these  arc  held  in  trust  for  tlie  depositors,  each  owning  an 
interest  in  same  determined  by  the  ratio  that  his  deposit  bears  to  the 
total  sum  so  invested.  The  income  is  collected  by  the  company,  and  the 
net  amount  after  deducting  its  fees  is  remitted  pro  rata  to  the  depositors 
at  stated  intervals. 

Customers  may  j)urchase  securities  outright,  as  they  would  of  any 
dealer.  Or  they  may  apjioint  the  company  agent  for  the  investment  of 
moneys,  and  for  the  care  of  securities  and  the  collection  of  income  on 
same.  Savings  depositors  whose  savings  have  accumulated  to  a  sufficient 
amount  frequently  take  advantage  of  the  opportunity  thus  aflorded  to 
increase  the  earnings  on  their  money. 

Investments  may  stand  in  the  name  of  the  comjvany  as  trustee,  thus 
securing  a  privacy  to  their  investments  which  many  customers  consider 
an  advantage. 


40  TRUST    COMPANIES. 

Real-Estate  Business. 

Reference  has  already  been  made  to  the  services  that  trust  companie» 
render  in  the  care  of  real  estate  committed  to  their  charge  by  private 
agreement  or  by  will  or  by  appointment  of  court.  The  equipment  which 
the  company  has  to  maintain  in  order  to  do  such  work  satisfactorily 
often  places  it  in  an  advantageous  position  for  undertaking  a  general 
real-estate  agency  business.  It  engages  in  the  purchase  and  sale  and 
renting  of  real  estate,  improved  or  unimproved,  on  commission.  Like  the 
other  departments  of  its  work,  this  business  is  frequently  of  great  use 
to  its  trust  department.  Many  trust  estates  have  rentable  property  for 
which  the  company  must  find  tenants.  Sometimes  trust  agreements  pro- 
vide that  a  portion  of  the  funds  of  the  trust  must  be  invested  in  real 
estate. 

The  company  is  often  of  assistance  to  prospective  buyers  who  wish  to 
borrow  money  in  order  to  complete  a  purchase  of  real  estate.  Its  ex- 
perience and  reliability  cause  it  to  be  called  upon  to  act  as  appraiser  of 
real  property. 

Insolvency  Business. 

Under  the  head  of  insolvency  business  are  included  the  duties  of 
assignee,  trustee  in  bankruptcy  dnd  receiver.  Trust  companies  are,  in 
many  Slates,  authorized  to  act  in  these  capacities. 

The  enactment  of  the  last  National  Bankruptcy  Law  in  1898  largely 
suspended  the  operation  of  the  State  insolvency  laws,  with  the  result  that 
assignments  have  become  less  frequent  than  formerly.  The  duties  of  an 
assignee  and  of  a  trustee  in  bankruptcy  are  similar,  and  consist  in  se- 
curing a  just  distribution  of  the  assets  of  an  insolvent  person,  firm  or 
corporation  among  the  creditors.  For  this  purpose  the  trust  company 
assuming  such  duties  takes  charge  of  the  property  of  whatever  kind,  if 
necessary  converts  it  into  cash,  pays  jsreferred  claims,  and  distributes  the 
remainder  pro  rata  among  the  creditors,  acting  all  the  time  under  the 
direction  and  authority  of  the  court  having  jurisdiction  in  the  case. 

The  duties  of  a  receiver  may  be  of  quite  a  different  character.  A 
receiver  is  a  person  or  corporation  appointed  by  a  court  of  equity  to 
take  charge  of  property  in  dispute.  Such  appointment  does  not  neces- 
sarily imply  insolvency.  It  may  be  made  necessary  on  account  of  dissa- 
tisfaction on  the  part  of  stockholders  with  the  management  of  the  com- 
pany, on  account  of  any  dispute  which  the  partners  of  a  firm  or  the 
stockholders  of  a  corporation  cannot  settle  between  them,  on  account  of 
a  serious  tangle  or  temporary  embarrassment  in  the  affairs  of  the  con- 
cern, as  well  as  on  account  of  actual  insolvency.  It  frequently  happens 
that  the  affairs  of  concerns  become  temporarily  embarrassed,  or  that 
there  is  such  friction  between  the  managers  that  it  becomes  necessary  to 
have  a  receiver  to  adjust  matters.  For  such  duties,  as  well  as  for  those 
of   assignee   or   trustee,  the  trust   company   is   specially   fitted,   and  this 


FUNCTIONS    OI"    TRUST    COMPANIES.  41 

class  of  work  has  been  the  field  of  some  of  the  most  suecessful  opt  rations 
of  these  companies.  The  duties  require  exjjerienee,  good  credit  and  large 
financial  responsibility.  Acting  under  the  authority  of  the  court  the  re- 
ceiver is  often  required  for  the  time  l)eing  to  carry  on  a  mercantile, 
manufacturing  or  transportation  business.  The  receivershij)  may  be  can- 
celled if  the  enterprise  is  put  upon  a  satisfactory  basis,  and  the  prop- 
erty be  handed  over  again  to  its  owners.  Or  it  may  be  neccessary  to  ef- 
fect a  sale  of  the  projjerty,  settle  the  debts,  and  pay  the  balance  to  the 
owners.  Sometimes,  when  the  circumstances  warrant,  large  advances  of 
money  are  made,  thereby  tiding  tiie  concern  over  its  difficulties  and  re- 
establishing it  as  a  profitable  enter))rise,  or  saving  the  assets  for  credit- 
ors or  stockholders.  Often  the  circumstances  make  advisable  a  read- 
justment of  corporate  indebtedness,  and  the  trust  company  is  peculiarly 
adapted  to  the  work  of  formulating  ))lans,  rtealling  outstanding  stocks 
or  bonds  and  issuing  new  securities. 

Sundry  Business  as  Trustee  or  A(;ent  for  Corporations. 

It  is  not  too  much  to  say  that  the  afiairs  of  the  gn-at  corpor.itions 
of  the  present  day^  as  well  as  those  of  tiie  smaller  ones  under  existing 
conditions,  could  be  carried  on  only  with  the  greatest  difficulty,  if  at  all, 
without  the  aid  of  some  such   financial  concerns  as  the  trust  companies. 

Probably  the  most  common  function  of  this  kind  is  that  of  acting  as 
trustee  under  a  trust  deed  or  mortgage  securing  an  issue  of  bonds."^  In 
signing  the  trustee's  certificate  on  the  bonds,  the  company  certifies  to  the 
regularity  of  the  issue,  and  to  the  genuineness  of  the  document  When 
necessary  it  sees  to  the  refiling  of  the  instrument,  althougli  the  mortgage 
often  specifically  relieves  the  trustee  of  this  responsibility.  It  does  not 
guarantee  the  value  or  the  payment  of  the  bond,  although  the  ])ublic 
often  seems  to  think  that  it  does.  As  a  matter  of  fact.  whil«>  the  form  of 
certificaticm  varies  somewhat,  it  never  covers  more  than  the  regularity 
of  the  issue  and  the  genuineness  of  the  document.  Most  trust  companies 
do,  however,  make  it  a  point  not  to  authenticate  lx>nds  without  having 
reason  to  believe  that  the  undertaking  rej)resented  is  presumably  safe. 
Unquestionably  the  best  companies  do.  and  ought  to,  exercise  the  great- 
est care  in  this  matter. 

In  its  capacity  of  trustee  under  a  trust  deed,  the  trust  company  is 
charged  with  the  duty  of  acting  as  agent  and  j)rotector  of  the  bond- 
holders. In  case  of  default  of  the  company  issuing  the  l>onds.  it  usually 
has  the  duty  of  foreclosing  on  the  property  in  the  interests  of  the  hold- 
ers of  the  securities,  and  of  exercising  numerous  incidental  duties  con- 
nected therewith. 

It  is  often  charged  with  the  custody  and  managrmmt  of  a  sinking 
fund,  either  in  connection  with  its  duties  as  trustee  under  a  trust  deed, 
or  as  a  separate  undertaking. 

63  See   Chapter  XVI. 


42  TRUST    COMPANIES. 

It  acts  as  fiscal  or  financial  agent  for  corporations  of  all  kinds — 
States,  municipalities,  railroads,  industrial  concerns.  It  pays  bonds, 
coupons,  interest.  It  may  take  entire  charge  of  the  disbursement  of 
dividends  and  interest,  attending  to  the  publication  and  mailing  of 
notices,  etc. 

For  syndicate  managers,  voting  trusts,  etc.,  it  issues  and  collects  calls 
for  installment  payments,  and  computes  and  distributes  to  the  proper 
parties  the  amounts  of  their  participations  in  the  profits  or  proceeds. 

It  acts  as  depositary  of  cash  and  securities,  under  varying  conditions. 
Underwriting  syndicates  appoint  it  depositary  and  trustee. 

It  is  made  agent  to  receive  subscriptions  to  stocks  and  bonds,  and  to 
deliver  the  same  when  issued. 

It  may  receive  and  execute  for  corporations  any  of  the  trusts  that 
have  already  been  mentioned  as  undertaken  for  individuals  under  pri- 
vate agreement. 

Business  as  Transfer  Agent  and  Registrar.* 

Trust  companies  are  very  generally  used  as  transfer  agent  for  stocks, 
and  as  registrar  for  stocks  and  bonds.  In  the  older  financial  com- 
munities the  value  of  such  services  has  come  to  be  so  generally  recog- 
nized tluit  securities  not  registered  by  a  responsible  agent  are  looked 
upon  with  suspicion.  The  historical  reason  usually  given  for  the  adop- 
tion of  the  custom  of  having  a  registrar  not  connected  with  the  concern 
issuing  the  stock,  was  the  discovery  some  years  ago  in  New  York  that  a 
prominent  railroad  president  had  fraudulently  overissued  the  stock  of  his 
company  many  hundreds  of  shares.  The  employment  of  a  responsible 
registrar  makes  such  a  fraud  impossible,  for  the  essential  function  of  the 
registrar  is  to  see  that  not  more  than  the  authorized  amount  of  stock  is 
issued. 

The  transfer  agent  assumes  the  entire  work  of  transferring  the  stock 
of  a  corporation — a  duty  requiring  thorough  knowledge  of  the  laws  gov- 
erning such  matters,  and  great  care  and  accuracy  in  the  performance  of 
the  details.  The  cancellation  of  a  single  certificate  of  stock  and  the  issu- 
ance of  a  new  certificate  often  involve  the  change  in  ownership  of 
tliousands  of  dollars'  worth  of  property;  yet  it  may  be  done  by  a  few 
strokes  of  the  pen. 

It  is  often  desirable  to  register  bonds,  either  as  to  principal  or  as  to 
interest,  or  both.  Usually  the  trust  company  that  acts  as  trustee  under 
llie  bond  issue  also  acts  as  registrar  of  the  bonds.  In  some  communities 
the  same  company  is  often  appointed  both  transfer  agent  and  registrar 
of  the  same  stock.  This  is  illogical,  since  the  function  of  the  registrar 
is  to  operate  as  a  check  upon  any  error  or  irregularity  on  the  part  of  the 
transfer  agent. 


See  Chapter  XVI. 


FUNCTIONS    or    THIST    ( OMI'ANIF.S.  43 

COHPOKATIOV    KKOIUiA.VI/.ATION    AN!*    I'l  N  A  XCIXG. 

Some  trust  coinpauii  s  li.irullf  .i  l.ir^r  aiiioimt  of  busiiirss  in  the  reor- 
ganization or  HnaneiuiT  of  corporate  enterprists  of  diHermt  kinds.  This 
field  is  one  eoncerninf;  whieh  a  wide  difl"«-rfnec  of  opinion  exists  among 
managers  of  trust  companies  as  well  as  among  the  general  public.  Therr 
are  companies  which  devote  themselves  to  this  business  very  largelv, 
while  others  abstain  from  it  absolut«ly,  brlicving  it  not  a  proper  fiehl 
for  com|)anies  which  handle  fund.s  in  trust. 

In  the  consideration  of  the  problem  nuieh  drpmds  upon  the  char- 
acter of  the  tinanciiig  that  is  to  be  und«-rtaken.  No  well-inforuji-d  person 
will  deny  that  there  is  a  field  for  services  in  this  line  whose  legitimacy 
is  beyond  tpiestion,  and  whose  performance  involves  little  risk.  It  is  like- 
wise evident  that  there  is  a  class  of  operations  so  risky  that  no  corpora- 
tion which  handles  the  funds  of  others  ought  to  undertake  them.  The 
temptation  to  step  from  one  class  of  operations  into  the  other  is  some- 
times great;  and  this  fact  doubtless  accounts  for  the  prejudice  that  exists 
in  some  quarters  against  trust  coinpauics  Mnd.rtaking  eorpnration  finan- 
cing of  any  kind. 

When  it  becomes  necessary  for  any  reason  to  r«-organi/,e  a  corpora- 
tion having  outstanding  securities,  the  trust  company  offers  exceptional 
facilities  for  the  work.  The  plan  of  reorganization  must  first  be  deter- 
mined.. If  new  securities  are  to  be  issued  the  old  ones  must  be  called  in 
and  tem])orary  receipts  given.  When  the  new  securities  are  ready  they 
must  be  distributed  among  the  receipt-holders  in  the  proper  propor- 
tions— the  determination  of  which  may  require  careful  computation.  At 
the  same  time  an  assessment  may  have  to  1m'  colh-eted,  or  a  cash  or  stock 
dividend  be  distributed,  rraetional  shares  or  bonds  may  need  t<»  be  pur- 
chased or  sold. 

When  a  new  corj>orate  enterprise  is  proposed  in  any  comnnniity 
some  one  in  whom  the  public  has  confidence  nmst  investigate  and  report, 
or  else  each  prosj)ective  investor  nuist  make  investigation  for  himself. 
Some  one  must  see  that  the  new  corporation  actually  owns  the  property 
•which  it  claims  to  have;  that  its  title  is  good;  that  the  securities  which  it 
offers  to  the  public  are  correctly  ])repared.  and  that  they  give  the  pur- 
chaser a  real  li«-n  upon  the  property;  in  short,  that  the  whole  proposition 
is  legitimate  and  made  in  good  faith.  The  servic»'s  here  outlined  appear 
to  be  perfectly  legitimate,  and  to  involve  no  risk  to  the  trust  company 
und<rtaking  thejn  other  than  the  risk  assumed  in  accepting  any  re- 
sponsible trust. 

These  services,  however,  c:)nstitute  only  tin-  preliminary  steps  in  the 
financing  of  enterprises.  The  securiti«s  are  ready  for  sale;  they  nuist 
now  be  sold.  It  is  at  this  point  that  the  most  serious  differences  of 
opinion  arise  regarding  the  attitude  of  the  trust  company.  In  placing  tlie 
securities  upon  the  market,  the  trust  company  may  act,  if  it  acts  at  all, 
as  a  mere  airent    for  the   sale  and   deliverv  of  same;  or   it   nviv  set  the 


44  TRUST    COMPANIES. 

stamp  of  its  approval  upon  tlicm  to  the  extent  of  recommending  them  for 
purchase  to  its  group  of  customers,  or  to  the  extent  of  purchasing  same, 
in  its  capacity  of  trustee,  for  some  of  its  trust  accounts;  or  it  may  pur- 
chase a  portion  of  the  issue  for  its  own  account.  Here  the  trust  com- 
pany is  clearly  treading  upon  ground  which  may  or  may  not  be  danger- 
ous, according  to  circumstances,  but  which  in  any  event  requires  the 
highest  degree  of  honor  and  integrity  and  business  judgment  of  the 
finest   type. 

Fidelity  Insurance  and  Title  Insurance. 

Some  of  the  States  empower  trust  companies  to  undertake  the  busi- 
ness of  fidelity  insurance  and  of  title  insurance,  but  comparatively  few 
trust  companies  undertake  these  duties.  As  a  rule,  where  they  do  un- 
dertake them,  they  make  such  work  a  specialtj^,  and  confine  themselves 
mainly  to  the  specialty.  The  larger  part  of  fidelity  insurance  business 
is  done  by  independent  bond  or  surety  companies. 

Fidelity  insurance  consists  chiefly  in  becoming  surety  for  or  guar- 
anteeing the  honesty  and  fidelity  of  employees,  officers  and  other  persons 
holding  positions  of  trust  and  responsibility.  Bonds  for  this  purpose 
were  formerly  signed  by  friends  of  the  person  holding  such  position, 
but  the  practice  is  rapidly  growing  of  having  such  bonds  executed  by 
companies  who  make  it  their  business.  Beyond  any  question  the  new 
plan  is  better  than  the  old,  whether  from  the  standpoint  of  the  person 
bonded,  the  one  signing  the  bond,  or  the  security  afforded  the  beneficiary 
named  in  the  bond.  The  person  who  is  required  to  give  bond  feels,  or 
ought  to  feel,  a  delicacy  about  asking  his  friends  to  go  on  his  bond.  If 
he  docs  ask  a  friend  to  do  so,  that  friend  must,  if  he  complies  with  the 
request,  assume  for  himself  and  his  heirs  a  responsibility  whose  degree 
is  not  determinable,  which  may  last  for  a  number  of  years,  and  which 
may  involve  himself  and  family  in  ruin.  To  the  beneficiary  under  the 
bond,  the  individual  is  not  satisfactory  as  a  surety,  because,  among  other 
reasons,  his  financial  ability  is  not  always  determinable  with  accuracy, 
and  it  may  be  ample  to-day  and  nothing  to-morrow.  On  the  other  hand, 
the  company  which  makes  a  business  of  fidelity  insurance  receives  com- 
pensation of  a  reasonable  annual  premium  for  its  services,  assumes  the 
risk  as  a  business  proposition  on  the  same  general  principles  as  the  life 
or  fire  insurance  company,  and  protects  the  beneficiary  by  a  capital  and 
financial  responsibility  that  are  known.  Fidelity  insurance  companies 
are  also  often  called  upon  to  sign  bonds  guaranteeing  the  financial  re- 
sponsibility of  individuals,  partnerships  and  corporations, 

A  title  insurance*  policy  is  "an  agreement  under  which  the  company 
agrees  to  defend,  at  its  own  expense,  all  litigation  directed  against  the 
title  insured  by  it,  and  if  attacked  successfully,  it  will  pay  the  parties 
guaranteed  the  amount  of  the  loss  up  to  the  full  sum  insured  for."  In 
short,  it  is  an  ordinary  certificate  of  title,  with  insurance  of  the  title 
added.     This  is  a  comparatively  new  business,  the  oldest  companies  hav- 

*  See    Chapter    XII. 


FUNCTIONS    OV    THL'ST    COMPANIES.  45 

ing  existed  only  about  twenty  years,  but  it  is  one  wliith  is  growing  rapid- 
ly. For  its  successful  perforuianee,  a  sptcial  and  elaborate  equipment  is 
necessary. 

Safe-Dkposit   BrsiNKss.* 

As  already  noted,  trust  companies  very  generally  conduct  safe- 
deposit  departments.  For  this  purpose  the  Ix-st  companies  have  specially- 
constructed  vaults  in  the  preparation  of  which  the  greatest  care  is  used  to 
insure  that  they  shall  be  absolutely  proof  against  fire,  burglars,  mobs 
and  water.  In  addition  guards  are  on  duty  twenty-four  hours  a  day,  and 
there  are  usually  automatic  alarms  to  give  notice  of  any  trouble.  For 
the  keeping  of  money  and  valuable  jjapers  individual  l>oxes  within  the 
main  vault  arc  rented,  access  to  which  may  be  had  only  by  the  renter  or 
his  authorized  deputy  in  company  with  the  vault  attendant.  For  the 
storage  of  larger  articles  of  value,  vaults  are  provided  in  which  space  is 
rented  by  the  cubic  foot  or  yard.  Many  companies  maintain  delivery 
wagons,  and  call  for  or  deliver  valuables  entrusted  to  their  care.  Coupon 
rooms  are  provided,  w])ere  each  customer  may  cut  his  coupons  or  examine 
his  papers  in  absolute  privacy.  The  large  companies  also  provide  other 
conveniences,  such  as  toilet-rooms,  reading-rooms,  parlors,  conunittee- 
rooms,  etc. 

This  department  is  a  valuable,  if  not  a«necessary,  part  of  the  equip- 
ment of  a  good  trust  company.  An  increasing  ninnber  of  depositors  feel 
the  need  of  such  accommodations,  and  nuich  prefer  to  have  them  under 
the  same  roof  as  their  bank  or  trust  company.  While  the  expense  of 
equipping  the  best  vaults  is  great,  it  is  not  all  chargt-able  to  the  safe- 
deposit  dei)artmenl,  since  trust  companies  need  large  and  impregnable 
vaults  for  the  safe  keeping  of  the  securities  and  other  valuables  en- 
trusted lo  them  in  the  other  departments  of  their  business. 

S'^PERIORITV    OF    TkI'ST    COMPANIES    OVER     I NMI VIOIA  F.S    A(  TIXCJ    IN     TrIST 

Capacities^ 

The  advantages  which  the  trust  company  has  over  individuals  for  the 
performance  of  the  various  trust  duties  outlined  in  the  preceding  pages 
are  many.  The  following  are  among  the  most  conspicuous  of  these 
advantages : 

The  life  of  the  trust  ctMiipaiiy  is  perpetual  it  will  live  long  enough 
to  execute  the  trusts  that  are  connnitted  to  it.  On  the  other  hand,  an  in- 
dividual to  whom  a  trust  is  committed  may  die  on  the  very  day  that  he 
undertakes  the  trust.  To  install  another  individual  trustee  will  then  in- 
volve delay  and  additional  expense — ])erhaps  serious  loss.  And  when  it 
is  done,  there  is  no  guarantee  that  he  will  not  die,  making  another 
change  necessary.  Even  if  the  individual  lives,  he  may  for  various 
reasons  resign  the  trust,  or  may  become  incapacitated  through  sickness 
or  other  cause. 

•  See   Chapter  Vin. 


46  TRUST    COMPANIES. 

The  trust  company  has  an  established  office  and  can  always  be  found 
when  needed.     The  mdividual  is  sometimes  difficult  to  locate. 

The  trust  company  is  always  at  its  place  of  business  every  business 
day  of  the  year.  It  does  not  take  vacations,  docs  not  go  away  on  business 
trips,  does  not  get  sick. 

The  trust  company  is  organized  especially  for  carrying  on  such 
work,  which  is  therefore  not  secondary  to  its  own  business,  but  is  a  part 
of  its  business.  If  an  individual  is  competent  to  carry  on  such  work  it  is 
because  he  has  had  a  successful  training  in  looking  after  his  own  af- 
fairs, and  his  success  is  usually  due  to  the  fact  that  he  has  given  his 
business  his  undivided  attention.  If  he  undertakes  the  trust  it  must  be 
as  a  thing  secondary  to  his  own  business,  or  else  he  must  neglect  the 
latter.  Finding  that  he  has  not  the  necessary  time  to  look  after  details, 
he  may  turn  them  over  to  an  incompetent  employee. 

Being  organized  for  the  work,  the  trust  company  has  all  the  necessary 
equipment— officers  and  clerks  trained  for  the  service,  conversant  with 
laws  and  forms  and  methods  of  procedure,  vaults  for  the  safe  keeping  of 
valuables,  correct  forms  for  the  keeping  of  accounts,  books  to  keep  track 
of  due-dates  of  securities  and  times  for  the  payment  of  taxes,  insurance, 
premiums,  etc.    It  does  not  forget. 

It  is  the  trust  company's  business  to  understand  the  work.  It  does 
not  make  mistakes  due  to  ignorance,  and  would  be  responsible  if  it  did. 
It  has  the  benefit  of  a  large  experience  in  the  work  it  is  undertaking. 
Very  often  individual  trustees  or  executors,  however  honest  and  faithful, 
make  mistakes  that  are  costly  or  entirely  disastrous. 

For  the  making  of  investments  in  the  name  of  the  trust,  the  trust 
company  has  advantages  which  few  if  any  individuals  have.  The  matter 
is  determined  by  a  committee  of  men  trained  in  such  work,  and  with 
every  facility  at  their  command  for  keeping  in  touch  with  conditions 
and  knowing  something  of  intrinsic  values.  The  extent  of  the  company's 
operations  also  enables  it  to  buy  on  better  terms  than  the  individual  can. 

The  trust  company  gives  to  the  trust,  w'ithout  extra  cost  in  ordinary 
matters,  the  benefit  of  the  best  legal  advice.  It  unites  the  advantages  of 
the  advice  of  a  number  of  experienced  counselors  with  the  promptness  in 
action  of  a  competent  individual. 

The  trust  company  is,  in  most  States,  subject  to  examination  by  State 
authorities.  Its  books  are  always  open  to  inspection  by  the  proper 
persons.  They  are  intelligible  and  kept  up  to  date.  The  individual  trus- 
tee under  private  appointment  is  not  usually  subject  to  examination; 
and  when  he  is,  his  books  are  often  in  a  tangle. 

The  superior  facilities  of  trust  companies  often  enable  them  to  ad- 
minister trusts  witli  far  greater  economy  than  is  possible  to  the  in- 
dividual trustee.  Expenses  are  often  much  less,  while  the  company  is 
usually  in  position  to  secure  a  greater  income  for  the  trust  than  could 
the  individual.  The  latter  must  give  a  bond,  the  cost  of  which  must  be 
borne  by  the  estate :  while  the  trust  company's  assets  and  special  deposit 
with  the  State  protect  the  trust  without  extra  cost. 


FUNCTIONS    or    TRUST    COMPANIES.  47 

Frequently  the  interests  of  the  estate — perhaps  its  very  preservation 
— depend  upon  temporary  advanees  of  monty.  The  trust  company  is  in 
position  to  make  such  advances;  few  individuals  are. 

Individuals  are  often  subject  to  personal  prejudices,  sympathies  or 
influences  which  lead  them  into  unwise  uses  of  the  property.  The  trust 
company  is  not  subject  to  these  things. 

The  most  important  eonsid«ration  of  all  is  that  of  safety — the  abso- 
lute safety  of  the  property.  Here  the  advantag«s  offered  by  the  trust 
company  as  compared  witli  the  individual  are  unquestioned.  Besides  the 
State  supervision  just  referred  to,  the  trust  coujpany  protects  its  cus- 
tomers by  a  larfje  capit/>l  and  surplus,  and  in  most  States  by  a  deposit 
made  with  the  State  officials  to  fjuarantee  the  faithful  performance  of 
its  trust  duties.  These  things  amply  insure  against  loss  due  to  possible 
dishonesty  on  the  part  of  the  company's  officers  or  employees.  The  com- 
})anv  as  an  institution  cannot  j)ossibly  be  dishonest  or  unfaithful.  It  has 
nothing  to  gain  and  everything  to  fose  by  such  a  courne.  It  is  to  con- 
tinue in  business  for  a  long  term  of  years  or  perpetually.  Its  success  de- 
pends upon  its  reputation  for  integrity  and  faithfulness.  \i  a  rec«nt 
meeting  of  the  Trust  Company  Section  of  the  .\merican  Bankers'  Asso- 
ciation, it  was  stated  that  there  had  never  been  a  trust  fund  impaired  by 
a  failure  of  a  trust  eomj)any  having  control  of  the  fund.  Instances  of 
loss  to  depositors  in  the  banking  department  there  have  been,  though 
not  many;  but  the  trust  funds  are  so  safeguarded  that  the  loss  to  them  is 
well-nigh  impossible.  There  may  be  loss  to  the  ordinary  creditor  of  a 
trust  company  without  in  the  slightest  degree  impairing  its  trust  funds, 
which  are  kept  se})arate  and  are  not  a  part  of  its  assets. 

On  the  other  hand,  losses  through  individual  trustees,  executors  and 
administrators  have  been  numerous.  How  often  have  the  papers  t«»ld  of 
instances  where  individuals  serving  in  such  capacities  have  proved  un- 
faithful or  fatally  incompetent!  Men  of  reputation  for  unquestioned 
integrity  have  been  led  through  speculation  or  «-mbarrassment  in  their 
own  affairs  to  borrow  the  funds  entrusted  to  them  with  the  full  intention 
of  repaying  the  loan  in  a  few  weeks  or  months,  only  to  find  that  such 
restituti(m  is  imjiossible,  th.it  they  are  defaulters,  and  that  the  widow  and 
orphan  are  left  penniless  through  their  unfaithfulness.  Others,  wil- 
fully dishonest,  liave  squandered  the  funds  entrusted  to  them  until  cvi  ry 
cent  was  gone  and  the  beneficiaries  of  the  trust  were  lef't  in  dir*-  need. 
Bonds  furnislied  by  these  men  have  often  proved  worthless;  and  where 
ultimately  found  good,  great  expense  of  litigation  has  Wen  incurred, 
and  the  property  has  Ixen  tied  up  j^ending  s«'ttlement  of  suits. 

Business  of  Banks  and   Trtst  Companies  Compaiikp. 

Trust  companies  carry  on  the  banking  business,  and  in  the  great 
majority  of  cases  this  business  constitutes  the  largest  part  o(  their 
duties.     The  banking  department   is  usually  divided  into  the  department 


48  TRUST    COMPANIES. 

of  commercial  accounts,  in  whicli  the  business  is  similar  to  that  of  the 
National  bank  with  the  exception  of  note  issue,  and  with  the  exception 
in  many  States  of  discounting  paper;  and  the  savings  department,  in 
which  the  business  is  identical  with  that  of  the  savings  department  of 
the  incorporated  Savings  banks  of  the  central  States,  and  not  materially 
different  from  that  of  the  mutual  Savings  banks  of  the  East. 

In  vieM-  of  the  statement  just  made,  the  question  naturally  arises, 
"What  is  the  difference  between  the  trust  company  and  the  bank?"  This 
tjuestion  has  been  discussed  to  some  extent  in  the  periodicals  and  in  the 
circulars  of  trust  companies.  In  these  discussions  are  represented  diam- 
etrically opposite  views;  namely,  that  there  is  no  difference  between  the 
two  institutions,  and  that  there  is  a  wide  difference.  The  variety  of 
opinion  arises  from  the  fact  that  different  writers  tell  of  the  particular 
trust  companies  with  which  they  are  familiar,  and  which  differ  from 
each  other;  and  also — and  more  generally — from  the  fact  that  some  dis- 
cuss the  question  from  the  theoretical  side,  while  others,  disregarding 
the  theory,  speak  of  the  actual  practice  as  they  find  it. 

So  far  as  concerns  business  other  than  that  of  the  banking  depart- 
ment, the  foregoing  discussion  of  the  functions  of  trust  companies  re- 
veals an  important  difference  between  these  companies  and  banks.  While 
it  is  true  that  some  of  these  functions  have  been  and  still  are  carried  on 
to  some  extent  by  some  banks,  the  tendency  is  to  leave  this  field  wholly 
to  trust  companies,  while  many  of  these  functions  may  not  legally  be 
undertaken  by  banks.  Allowing  for  exceptions,  it  may  be  said  without 
fear  of  contradiction  that  the  functions  thus  far  described  are  distinctively 
those  of  trust  companies. 

As  a  matter  of  theory  there  are  important  differences  between  the 
business  of  the  banking  department  of  trust  companies  and  that  of  State 
and  National  banks.  In  theory  and  in  early  practice  the  banking  depart- 
ment of  the  trust  company  was  merely  incidental  to  its  other  functions, 
being  maintained  to  care  for  the  funds  coming  to  it  in  trust.  The  trust 
company  is  a  depositary  for  the  inactive  and  accumulating  funds  of  the 
community,  the  bank  for  the  active  fimds — the  funds  used  in  business. 
It  follows  that  the  natural  depositor  of  the  bank  is  the  business  man,  or 
firm  or  company,  whose  funds  are  continually  in  use,  quickly  turned 
over,  and  who  expects  in  return,  not  interest,  but  accommodation  in  the 
way  of  discounts.  The  natural  depositor  of  the  trust  company,  on  the 
other  hand,  is  the  person  or  concern  whose  funds  are  not  in  active  use, 
and  who  wislies  a  place  for  the  safe-keeping  and  accumulation  of  same. 
A  prominent  writer  on  trust  company  subjects®*  has  classified  trust  de- 
positors, as  distinguished  from  bank  depositors,  as  follows: 


64  Breckinridge  Jones,  President  of  the  Mississippi  Valley  Trust  Co.,  St. 
Louis.  His  paper  on  "The  Trust  Company  Question,"  delivered  before  the  Mis- 
souri Bankers'  convention  in  1892,  and  published  in  pamphlet  form  by  his  com- 
pany, is  a  masterpiece,  and  has  been  widely  copied.  So  far  as  the  writer  knows, 
it  was  the  first  published  study  of  the  question.  The  -n-riter  acknowledgres  his 
indebtedness   to  this   paper  for  many  of  the  points  here   given. 


FUNCTIONS    OF    TRUST    COMPANIES.  49 

"1.  The  laborer,  mechanic,  chrk,  teacher — all  those  who  work  for 
wages  or  on  salary. 

2.  The  capitalist,  the  professional  man,  the  married  woman  who  has 
a  separate  estate. 

3.  The  business  man  who  wishes  to  separate  his  private  income  or 
the  surplus  profits  of  his  business  from  his  general  business  capital. 

4.  The  corporation,  jiublic  or  private,  that  is  accumulating  a  sinking 
fund,  or  any  individual  who  is  husbanding  a  balance  to  pay  a  debt. 

5.  The  executor,  administrator,  curator,  guardian,  assignee,  receiver, 
trustee  under  deed  or  will  or  order  of  court. 

In  short,  all  such  who  wish  their  daily  deposits  to  draw  interest." 

A  study  of  this  list  reveals  a  class  of  accounts  entirely  distinct  from 
those  handled  by  the  ordinary  bank,  and  a  class  of  accounts,  too,  for 
which  little  provision  is  made  by  National  banks  or  by  the  old-time 
State  banks. 

These  trust  depositors  expect  from  the  trust  company  in  return  for 
their  accounts  compensation  of  quite  a  different  kind  from  that  which 
the  bank  depositors  expect  from  their  bank.  Their  moneys  are  placed  in 
the  care  of  the  company  for  accumulation;  they  want  interest  on  their 
funds  as  well  as  a  safe  place  to  keep  them.  The  ability  to  withdraw  the 
funds  on  demand  is  not  of  pressing  importance  to  them,  and  they  are 
often  willing  to  give  notice  some  time  in  advance  of  intention  to  with- 
draw their  deposits. 

It  results  that  the  trust  company  is  in  position  to  invest  its  funds  in 
ways  quite  different  from  the  bank.  The  funds  of  the  latter  must  be  so 
placed  that  they  can  be  quickly  recovered  to  meet  the  needs  of  cus- 
tomers, being  usually  invested  in  paper  that  will  mature  in  tliirty,  sixty 
or  ninety  days,  or  four  months  at  the  longest.  The  trust  company  can 
safely  make  long  time  loans  on  collateral  or  on  real  estate.  Moreover, 
since  the  trust  company  pays  in  full  for  the  use  of  its  depositors'  money 
by  allowing  interest  on  such  money,  it  has  no  obligation  to  confine  its 
loans  to  depositors,  but  may  lend  to  whomsoever  offers  the  best  security 
and  the  highest  rate;  or  it  may  invest  its  money  largely  in  bonds  and 
stocks.  The  bank  remunerates  its  depositors  by  ofl'ering  them  a  line  of 
discounts,  and  hence  must  reserve  its  money  mainly  for  loans  to  such 
depositors. 

The  necessity  of  di\iding  its  loanable  funds  equitably  among  its  de- 
positors who  desire  discounts  requires  the  bank  to  confine  its  loans  to 
comparatively  small  amounts,  while  the  trust  company  is  in  ))osition  to 
make  large  loans. 

As  a  matter  of  theory,  then,  luith  as  regards  the  classes  of  customers 
whom  they  serve  and  as  regards  the  uses  of  their  funds,  trust  companies 
and  banks  occupy  distinct  fields.  They  are  co-ordinate  institutions,  each 
supplementing  the  work  of  the  other,  and  l>oth  necessary  factors  in  car- 
rying on  the  financial  affairs  of  the  community.  There  is  here  not  com- 
petition, but  co-operation. 


50  TRUST    COMPANIES. 

So  much  for  the  theory.  In  actual  practice,  the  differences  between 
the  two  classes  of  institutions  are  much  less  marked,  and  the  tendency  in 
many  communities  is  steadily  to  lessen  such  differences  as  do  exist.  As 
a  matter  of  fact  the  trust  companj'^  of  to-day  has  invaded  a  portion  of 
the  field  of  the  bank,  while,  on  the  other  hand,  the  bank  is  invading  a 
portion  of  the  field  of  the  trust  company.  Most  trust  companies  seek 
business  accounts,  payable  on  demand  by  check,  offering  as  inducement 
interest  on  satisfactory  daily  balances.  In  cases  where  the  law  does  not 
forbid,  some  companies  also  offer  lines  of  discount.  On  tl^e  part  of  the 
banks  there  is  a  noticeable  tendency  in  many  localities  to  seek  inactive 
accounts  on  which  interest  is  allowed.  This  movement  is  being  taken  up 
by  National  banks,  which  in  some  instances  maintain  savings  depart- 
ments. 

The  result  is  that  there  are  communities  in  which  there  are  only 
slight  differences  between  the  business  done  by  State  banks  and  that 
done  by  the  banking  departments  of  trust  companies.  Both  maintain  com- 
mercial banking  and  savings  departments  conducted  in  the  same  ways. 
Their  loans  and  investments  are  of  practically  the  same  character. 

In  other  communities,  where  most  of  the  banks  and  trust  companies 
follow  the  lines  of  business  for  which  each  M'as  theoretically  established, 
there  may  sometimes  be  found  individual  trust  companies  which  do  a 
regular  banking  business,  and  individual  banks  which  compete  for  the 
dormant  accounts  that  naturally  belong  to  trust  companies  or  Savings 
banks. 

Taking  it  the  country  over,  it  is  safe  to  say  that  the  difference  be- 
tween the  average  State  bank  and  the  banking  department  of  the  average 
trust  company  is  slight,  except  in  those  States  where  trust  companies 
may  not  discount  commercial  paper.*'"  Such  differences  as  exist  usually 
concern  the  proportions  of  the  various  kinds  of  business  handled,  busi- 
ness accounts  as  a  rule  forming  the  larger,  and  inactive  accounts  the 
smaller  part  of  the  bank's  business,  while  the  reverse  is  true  of  the 
banking  department  of  the  trust  company. 

Where  the  trust  company  is  forbidden  to  discount  commercial  paper, 
there  results,  of  course,  a  distinct  difference  in  the  business  of  the  two 
institutions  due  to  such  prohibition.  In  such  cases  the  trust  company 
still  handles  a  large  number  of  business  accounts,  as  many  business  men 
either  do  not  need  discounts,  or  have  other  means  of  procuring  them.  In 
many  places  the  practice  has  grown  of  forming  working  agreements  by 
which  groups  of  banks  and  trust  companies  throw  business  into  each 
others'  hands.  By  this  means  a  given  group  of  financiers  is  able  to 
handle  financial  business  of  any  kind.  This  plan  is  a  recognition  at 
once  of  the  need  of  both  institutions  and  of  essential  differences  in  their 
functions. 


65  This  statement  is  based  on  a  personal  study  of  trust  companies  in  eight 
of  the  largest  cities,  and  upon  an  examination  of  the  business  advertised  in  the 
circulars  of  some  three  hundred  representative  trust  companies  located  in  all 
parts   of   the  c«untry. 


FUNCTIONS    or    TRUST    COMPANIES.  :.! 

There  is  considerable  dirterence  between  the  State  laws  governing 
trust  companies  and  those  governing  State  banks.  As  a  rule,  the  former 
arc  much  less  hampered  by  restrictions  in  the  character  of  their  business. 
In  a  later  chapter  tlie  laws  of  the  different  States  will  be  discussed  in 
detail. 

It  is  evident  that  then-  is  a  close  resemblance  between  the  business  of 
the  savings  department  of  the  trust  company  and  that  of  the  Savings 
bank,  especially  of  the  incorporated  Savings  bank,  which  is  the  usual 
form  of  such  institutions  outside  of  the  Eastern  and  New  England 
States.  Both  are  after  savings  accounts.  With  r»gard  to  the  mutual 
Savings  banks,  particularly,  the  theory  is  that  such  institutions  exist 
especially  for  the  accounts  of  those  whose  savings  are  comparatively 
small,  while  the  trust  companies  are  supposed  to  exist  primarily  for  the 
safe  keeping  and  accumulation  of  larger  accounts.  In  practice,  however, 
this  distinction  is  not  always  maintained,  although  it  is  j)robably  true 
that  the  average  savings  account  of  the  trust  company  is  larger  than  that 
of  the  mutual  Savings  bank.  But  trust  companies  usually  advertise  that 
deposits  of  more  than  five  or  ten  thousand  dollars  will  not  1m-  received  at 
the  regular  interest  rates.  The  minimum  deposit  r<e<ived  by  either  in- 
stitution is   usually  one  dollar. 

In  this  connection  it  is  worth  while  to  call  atteiitiiui  to  the  important 
service  that  the  trust  com})any,  as  well  as  the  Savings  bank,  is  rendering 
in'  the  way  of  adding  to  the  available  money  sup))ly  of  the  country. 
Through  the  medium  of  a  large  number  of  small  accounts  they  gather 
from  the  people  of  their  neighborhoods  large  sums  that  would  other- 
wise be  kept  in  the  traditional  st(>cking  or  in  private  safes.  These  funds 
are  thus  placed  at  the  disposal  of  the  community  for  use  in  carrying  on 
its  business,  and  make  possible  enterprises  that  b»nefit  the  whole  people, 
and  that  would  otherwise  fail  for  lack  of  available  funds.  Particularly 
is  this  the  case  with  reference  to  those  companies  in  outlying  parts  of 
large  cities,  or  in  other  localities  where  banks  would  not  find  enough 
business  to  keej)  them  alive.  As  an  instance  of  this,  the  writi-r  knows  of 
a  trust  company  located  outside  the  business  district  of  a  large  city 
which  in  ten  years  accumulated  de))Osits  of  over  two  millions,  the  larger 
part  of  which  came  from  persons  who  had  not  therttofore  deposited  in 
banks  at  all.  Here  was  a  large  sum  put  into  active  circulation  and  so 
made  ])roductive,  to  the  nuitual  benefit  of  the  depositors,  the  bank  and 
the  community  at  large. 

MiSCKLI.AXEOrS    I'rXcTlONS. 

Occasionally  trust  comjjanies  perform  functions  not  mentioned  in  the 
foregoing  discussion.  For  instance,  some  companies,  in  the  far  Western 
States  particularly,  write  fire  insurance  as  agents.  The  wide  powers 
granted  by  the  laws  of  most  States  permit  trust  companies  to  undertake 
almost  any  kind  of  financial  business,  and   the  result  is  that  companies 


52  TRUST    COMPANIES. 

in  different  localities  take  up  special  lines  of  business  for  which  there 
happens  to  be  a  field. 

It  is  usual  for  trust  companies  to  ofl'er  to  customers  the  services  of 
their  officers  for  legal  and  financial  advice  on  ordinary  matters  that  in- 
volve no  complicated  questions.  This  does  not  mean,  of  course,  that  the 
campany  undertakes  to  do  the  lawyer's  work  in  such  cases.  But  many 
of  its  customers  are  wholly  ignorant  of  the  most  common  principles  and 
practices  in  business  and  commercial  law,  and  as  a  result  are  greatly 
profited  by  advice  in  what  seems  to  the  experienced  a  very  simple  mat- 
ter. Much  litigation  and  loss,  and  many  foolish  "investments"  are  pre- 
vented by  a  little  advice  to  such  persons.  The  banker  sometimes  per- 
forms similar  services  for  his  customer,  but  the  usual  bank  customer  is 
acquainted  with  business  procedure,  while  a  considerable  number  of  trust 
company  customers  are  not  so  acquainted. 

Complaints  are  heard  in  some  quarters  that  the  trust  company  is  en- 
croaching upon  the  field  of  the  lawyer.  Undoubtedly  this  is  true  as 
regards  the  Iiandling  of  estates  and  the  performance  of  many  duties  of  a 
iiduciar}^  nature.  On  the  other  hand,  the  trust  company  gives  employ- 
ment to  a  large  number  of  lawyers.  Every  company  has  its  attorney  or 
force  of  attorneys,  and  trust  officers  are  usually  chosen  from  the  ranks 
of  those  who  have  had  legal  training.  Trust  companies  make  it  a  prac- 
tice, when  a  lawyer  brings  them  a  trust,  to  retain  him  as  attorney  for 
that  trust  whenever  special  services  are  needed.  Furthermore,  the  trust 
company  is  a  great  aid  to  the  lawyer  in  many  ways.  He  often  needs 
to  select  for  his  clients  a  trustee,  guardian,  receiver,  assignee,  depositary, 
etc.  He  is  often  called  upon  to  make  investments  for  his  clients — a  re- 
sponsibility that  man}'  lawyers  do  not  care  to  assume.  In  the  practice 
of  corporation  law  the  lawyer  finds  the  trust  company  of  special  use  to 
him.  Its  facilities  for  the  accurate  keeping  of  accounts,  preparing  re- 
ports, caring  for  securities  and  managing  estates  appeal  to  many  lawyers 
who  have  not  the  time  or  the  inclination  to  assume  other  than  the  purely 
legal  part  of  the  work.  To  a  great  extent  the  trust  company  supplements 
and  assists  the  lawyer  of  large  practice. 

Sources  of  Earning  Power. 

It  is  evident  that  the  sources  of  earning  power  of  the  trust  company 
are  much  more  numerous  than  those  of  the  bank.  It  may  do  all  that  the 
bank  may  do,  and  many  things  besides.  One  writer^ "^  has  pointed  out 
the  fact  that  the  trust  company  has  developed  all  the  earning  power  of 
an  individual,  thus  adding  greatly  to  its  profits,  as  well  as  to  its  useful- 
ness. To  get  at  the  possible  earning  power  of  the  trust  company, 
therefore,  one  must  remember  that  it  is  not  confined  to  the  profits  from 
the  interest  on  funds  under  its  care  in  the  form  of  capital  and  deposits, 

66     Guy  Morrison  Walker:  pamphlet  on  "Trust  Companies." 


FUNCTIONS    OF    TIUST    ( O.MI'ANIES.  53 

but  adds  fees  for  its  services  in  trust  e:ii).uiti< .-,  i»f  urdiuary  kinds  and 
special  fees  for  special  services.  The  trenundous  earnings  of  some 
trust  companies  have  been  due  more  to  the  skill  of  tin  ir  officers  in  per- 
forming services  of  a  more  or  less  personal  nature  than  to  the  natural 
earnings  of  their  banking  departments  or  the  regular  fees  on  trust  work. 
It  is  also  true  that  during  the  Hush  times  preceding  the  year  1903, 
large  sums  were  made  by  many  companies  through  underwritings  and 
stock  investments.  These  means  of  profit  were,  to  say  the  least,  hazard- 
ous, and  in  many  cases  the  profits  of  this  kind  of  preceding  years  have 
been  reduced  or  turned  into  losses  since  Ifjon.  The  depreciation  of 
values  beginning  in  1903  brought  about  a  healthful  reaction  in  tin-  unli.y 
of  some  companies. 

The   Trusi    Company   Stii.i.   in   thk    Foum ativi:    Pkuiud. 

One  thing  that  must  strike  the  careful  observer  forcibly  is  that  the 
trust  company  as  an  institution  is  still  in  the  formative  period.  As  has 
been  already  pointed  out,  it  travels  ahead  of  statute  law,  such  laws 
usoally  being  formulated  to  govern  a  business  already  est«blish«d.  rathi  r 
ihan  outlining  a  business  to  be  put  in  operation,  as  was  the  case  with  the 
National  Bank  Act.  As  a  consequence  it  is  too  -early  to  determine  the 
exact  form  into  which  experience  will  cause  the  trust  eonipany  business 
to  crystallize. 

•  That  there  is  and  ought  to  be  a  growing  d«inand  for  more  careful 
regulation  and  examination  of  trust  c«)mpanies  in  many  States  is  evident, 
and  the  interests  of  both  the  public  and  the  trust  companies  themselvfs 
will  be  subserved  by  a  wise  response  to  such  demand.  On  the  other  hand, 
it  would  be  a  misfortune  if  unnecessary  restrictions  were  imposed,  which 
would  result  in  preventing  the  trust  companies  from  developing  in  har- 
mony with  the  changing  conditions  of  our  American  life.  In  this  power 
of  adjustment  to  existing  conditions  lies  the  secret  of  the  great  success 
of  these  institutions,  not  only  in  making  earnings  for  tluinsclves,  but  as 
■well  in  serving  the  general  public.  Those  bankers  wlm,  feeling  the  com- 
petition of  trust  companies,  wish  to  have  the  laws  of  various  Stat<  s 
amended  so  as  to  put  the  banks  in  better  relative  position,  should  bear 
this  fact  in  mind.  If  changes  are  to  be  made  in  the  laws,  wisdom 
dictates  that  such  changes  be  in  the  line  of  removing  any  needless  re- 
strictions on  the  work  of  the  banks,  if  such  exist,  ratlur  than  imposing 
any  needless  restrictions  on  the  worlt  of  trust  companies.'"'" 

The  fact  is  that,  allowing  for  some  exceptions,  the  methods  of  trust 
companies  are,  on  the  whole,  sound  business  methods,  attended  with  as 
much  safety  to  the  public  and  to  the  companies  as  those  of  the  banks. 
Besides  this  they  have  the  great  advantage  of  Ix-ing  better  adapted  to 
jircsent  needs,  and  of  being  able  to  adapt  tlxniselves  to  new  needs  when 
they  present  themselves. 


67     See  Guy  Morrison  Walker:  pamphlet  on  "Trust   Com  pan  less."   I'P.    H-16. 


CHAPTER  in. 
THE  ORGANIZATION  OF  TRUST  COMPANIES. 

THE  question  as  to  whether  there  is  a  sufficient  field  for  the  organiza- 
tion of  a  new  trust  company  in  any  given  community  is  one  which 
should  be  given  careful  study  before  steps  are  taken  for  such 
organization.  During  the  flush  times  preceding  the  depression  of  1903 
and  the  panic  of  1907  some  trust  companies  were  undoubtedly  organized 
for  which  there  was  not  a  sufficient  field.  Many  of  them  have  passed 
out  of  existence,  involving  losses  to  their  stockholders.  On  the  other 
hand,  trust  companies  have  been  started  in  places  where  the  conservatives 
could  see  no  possible  chance  for  success,  and  have  become  prosperous  and 
useful  institutions. 

Whether  the  trust  company  form  of  organization  is  to  be  preferred  to 
others  must,  of  course,  depend  upon  the  circumstances  of  the  time  and 
place.  The  present  tendency,  however,  is  imdoubtedlj'^  towards  prefer- 
ring the  trust  company  form  except  where  the  conditions  clearly  call  for 
a  National  bank;  and  many  State  banks  and  incorporated  Savings  banks, 
as  well  as  some  National  banks,  are  being  changed  to  trust  companies.  Be- 
cause of  their  wide  povv'ers  and  of  the  privileges  wliich  they  enjoy,  these 
institutions  often  thrive  where  ordinary  banks  could  not  make  a  living. 

Elements  Contributing  to   Success. 

The  success  of  a  new  institution  will  depend  very  largely  upon  the 
men  behind  it.  A  poorly  "backed"  company  will  have  difficulty  in  mak- 
ing a  success  even  in  a  good  field,  while  companies  with  the  proper  back- 
ing and  officers  have  often  prospered  in  fields  that  seemed  fully  occupied. 
If  a  new  company  is  projected,  therefore,  the  question  of  prime  impor- 
tance at  the  start  is,  Who  will  be  its  stockholders,  its  directors,  its  officers? 
Tirst  of  all,  they  should  be  men  whose  standing  in  the  community  is 
unquestioned — men  of  probity  and  character.  Men  who  have  money  and 
nothing  more  may  help  the  bank  at  the  start,  and  may  bring  it  much  busi- 
ness, but  they  cannot  help  in  building  up  business  among  the  general 
public,  whose  confidence  must  be  obtained  before  the  new  institution  can 
meet  with  pronounced  success.  While  this  is  conspicuously  an  age  of 
money  and  money  power,  there  are,  fortunately,  some  things  which  mere 
money  can  not  do,  and  one  of  them  is  to  secure  the  confidence  of  the 
public. 

I        There  is  no  substitute  for  character  as  a  means  of  leading  the  people 
to   put  trust  in  a   financial   institution. 

The  shareholders  should  be  men  whose  interests  lie  in  the  community 
where  the  company  is  to  be  located,  thereby  insuring  their  continued  sup- 
port of  the  enterprise  after   it   is   launched.      An   institution  with   good 


ORGANIZATION   OF    TRUST    COMPANIES.  55 

prospects  is  almost  always  able  to  pick  its  stockholders,  and  should  avoid 
admitting  those  who  wish  to  subscribe  uurely  as  a  speculation.  Sub- 
scribers are  often  required  to  pledge  a  certain  amount  of  business  to  the 
new  company  for  a  given  period,  and  to  state  wiiat  business  thry  think 
they  can  bring  from  others.  If  the  concern  is  to  do  a  general  business, 
not  confining  itself  to  a  specialty,  the  stockholders  should  \>e  so  selected 
as  to  represent  as  many  different  lines  of  business  and  professions  as 
.j)0ssible.  Some  difference  of  opinion  exists  as  to  whether  it  is  better 
to  have  a  large  number  of  stockholders  with  few  shares  held  by  each, 
or  to  limit  the  number  and  increase  the  holdings.  The  former  plan 
usually  insures  a  larger  group  of  customers  from  the  start,  and  gives  the 
general  public  more  interest  in  the  project.  The  latter  plan  permits  of 
more  unanimous  and  concerted  action,  and  is  sometit!i><s  «»r  convenience. 
As  a  rule,  however,  the  former  jilan  is  preferable. 

Steps   Prelimixarv  to  thk  Ouuamzation. 

AVhen  it  has  Ix-en  decided  that  a  company  shall  be  organized,  a  meet- 
ing sliould  be  called  to  discuss  j)reliminary  j)lans  and  to  prepare  papers 
in  application  for  a  charter.  Blank  forms  for  this  purpose  are  usually 
supplied  by  the  State  banking  department,  where  such  a  department  ex- 
ists, or  by  the  Secretary  of  State.  In  any  case  the  forms  should  b«'  pre- 
pared by  a  competent  attorney,  and  his  services  should  be  utilized  during 
all  the  proceedings  until  the  company  has  begun  business.  The  minutes 
of  the  meetings  should  either  be  kept  by  him,  or  else  be  subject  to  his 
examination  and  approval.  At  this  first  meeting  a  connnittee  should  be 
appointed  to  receive  subscriptions  to  the  stock  and  to  apportion  the  stock 
carefully  among  the  bidders. 

From  this  point  on  the  plan  of  procedure  will  dcpetul  upon  the  laws 
of  the  State  in  which  the  company  is  to  be  incorporated.  Three  plans  of 
incorporation  are  in  vogue.  In  some  States  trust  companies  are  incor- 
porated only  by  special  act  of  the  Legislature,  following  the  usual  ante- 
bellum method  of  chartering  State  Hanks.  In  other  States  special  laws 
for  the  incorporation  of  trust  companies  have  been  passed.  In  the  re- 
maining States  these  companies  must  be  organized  under  the  general 
laws  for  the  incorporation  of  banks  or  of  corporations  for  profit. 

As  an  example  of  the  procedure  in  those  States  having  s{)ecial  laws 
for  the  incorporation  of  trust  comj)anies.  that  prescribed  by  the  laws  of 
the  State  of  New  York  may  be  taken. 

IXCORPORATION    OK    TrI'.sT    C'oMPANIKS    IN    NkW    YdKK. 

Since  1887  most  companies  in  the  St/ite  have  l>een  incorporated  under 
the  general  trust  company  law  of  that  year,  though  some  have  been  in- 
corporated under  the  old  plan  of  a  special  act  of  the  Legislature.  L'nder 
the  general  law.  tiiirteen  or  more  persons  may  form  such  a  corporation. 
They  must  first   publish  a  notice  of  intention  to  organize  a  trust  com- 


56  TRUST    COMPANIES. 

pany,  at  least  once  a  week  for  four  weeks,  in  a  newspaper  to  be  desig- 
nated by  the  Superintendent  of  Banks,  in  the  city  or  town  where  such 
trust  company  is  proposed  to  be  located;  and  a  copy  of  such  notice  must 
be  sent  at  least  fifteen  days  before  the  filing  of  the  organization  certi- 
ficate, to  each  trust  company  organized  and  doing  business  in  the  city  or 
town  where  such  company  is  proposed  to  be  located.  The  State  banking 
department  furnishes  a  form  for  this  notice,  which  reads  as  follows: 

NOTICE  OF  INTENTION  TO  ORGANIZE. 

We,  the  undersigned,  hereby  give  notice  of  our  intention  to  organize  a  trust 
company,  under  and  pursuant  to  the  laws  of  the  State  of  New  York,  and  in 
conformity  with  the  statute  in  such  case  made  and  provided,  we  hereby  specify 
and  state  as   follows,  to  wit: 

First,   The   names   of   the   proposed   corporators   are: 


Second,  The  name  of  the  proposed  trust  company  is  . 

Third,  The  location  of  the  proposed  trust  company  is  to  be  . 

In    witness    whereof    we    have    hereunto  affixed   our  signatures  this  day 

of  ,  190—. 

(Here  must  be  placed  the  signatures  of  the  corporators.) 

The  corporators,  having  complied  with  these  requirements,  must  fur- 
nish proof  of  their  having  done  so  to  the  Superintendent  of  Banks.  For 
the  notices  in  the  newspaper,  ordinary  proof  of  publication  should  be 
furnished.  The  department  furnishes  a  form  for  the  proof  of  service  on 
the  existing  trust  companies,  as  follows : 

PROOF  OF  SERVICE  OF  NOTICE  OF  INTENTION  TO  ORGANIZE. 

State  of  New  York,  | 
County  of  j     ss. 

,  being  duly  sworn,  deposes  and  says  that  he  is  upwards  of  twenty-one 

years  of  age,  and  resides  at  No.  ,  in  the  city  of  ■ — ;  that  on  the  

day  of  ,  190 — ,  he  served  a  copy   of  the   annexed   notice   of  intention   to 

organize  upon  each  trust  company  hereinafter  named  by  mailing  to  each 

of  such  trust  companies  a  true  copy  of  said  notice  at  the  post  office  in  the  city 

of  ,    inclosed    in   a    sealed   envelope    and    directed   to    each   of   such   trust 

companies  at  its  post  office  address,  and  prepaying  the  proper  postage  on  each 
of  said  notices  so  mailed,  as  follows,  to  wit: 

(Here  must  follow  the  names  of  the  said  trust  companies.) 

This  document  must  be  properly  sworn  to. 

The  certificate  of  organization  must  next  be  filed  with  the  Super- 
intendent of  Banks,  after  the  expiration  of  the  required  period  as  above 
stated.     The  form  of  such  certificate  reads  as  follows : 

CERTIFICATE    OF    ORGANIZATION    OF   . 


Know  all  ^ien  by  these  presents: 

That   we,   the   undersigned,  ,  ,  , 

all  being  persons  of  full  age  and  citizens  of  the  United  States,  and  a  majority 
of  us  being  residents  of  the  State  of  New  York,  do  hereby  associate  ourselves 
together   for  the  purpose  of  forming  a  trust  company,  under  and  pursuant  to 


ORGANIZATION    Ol'    TRUST    COMPANIKS.  :,? 

the  laws  of  the  State  of  New  York,  and  for  such  purpose  we  do  hcrcbv,  under 
our  respective  hands  and  seals,  execute  and  duly  ackn«iwledfre  this  organisation 
certificate,  in   duplicate,  and  specifically   state  as   follows,   to   wit: 

First,  The  name  by  which  the  corjxiration  shall  be  known  is  . 

Second,  The  place  where  its  business  is  tu  be  tran^ucted  is 


Third,  The  amount  of  its  cai)ital  stock  is  to  be dollars,  and  the  number 

of  shares  into  which  the  same  is  to  be  divided  is  — ' . 

Fourth,  The  name,  residence  and  post  office  address  of  each  member  of  the 
corporation  are  as   follows:     , ,  . 

(Here  must  be  given  the  complete  list  of  stockholders.) 

Fifth,  The  term  of  existence  of  the  corporation  is vears. 

Sixth,  the  subscribers,  the  nieniiiers  of  the  s.iid  curixiratidii,  tio,  and  each  for 
himself  docs  bcrciiy,  (lc<lare  tlwit  he  will  acccjit  the  respotisibdities  and  faith- 
fully discbargre  the  duties  of  a  director  tlierein  if  electe<l  to  act  as  such  when 
authorized  in  accordance  with  the  j)rovisions  of  the  Hanking  Ijiw  of  tl>e  State 
of  New  York. 

In  wiTNKSs  wnKKKOK,  ^Ve  have  hereunto  set  our  bands  and  seals,  and  ex- 
ecuted  this  certificate   in   djiplicate,   tliis  day   of ,   190—. 

(Here  must  follow  the  sifrnatures  of  the  stockholders,  and  they  must  swear 
to  same  before  a  notary  in  the  usual   form.) 

Within  si.xty  days  after  its  acknowledgment,  this  certificate,  which, 
as  stated  must  be  executed  in  duplicate,  must  be  filed,  one  copy  in  the 
office  of  the  county  clerk  of  tlie  county  wherein  such  trust  company  is 
proposed  to  be  located,  and  one  in  tlie  office  of  tlie  Superintendint  of 
Banks  of  the  State.  A  certified  cojiy  of  the  duplicate  filed  with  the 
county  clerk  must  be  sent  to  the  Superintendent  of  Banks,  that  he  may 
have  official  notice  of  the  filing  of  said  duplicate. 

The  statute  says:  "Upon  the  receipt  of  any  such  organization  it  r- 
tificatc  in  the  office  of  the  Superintendent  of  Banks,  if  it  shall  not  be  in 
form  and  substance,  or  duly  and  properly  acknowledged,  as  herein  re- 
quired, or  sliall  not  be  accompanied  by  satisfactory  evidence  of  the  pub- 
lication and  service  in  got)d  faitii  of  the  notice  of  intention  to  organize, 
tlie  Superintendent  shall  refuse  to  file  sucli  certificate  until  it  shall  be 
amended  in  conformity  to  the  provisions  of  this  artieh-.  If  fulfilling  all 
of  the  prescribed  conditions,  the  Superintendent  shall  indorse  the  cer- 
tificate filed  for  examination,  with  the  date  of  such  indors«'nient." 

Having  filed  the  certificate,  the  Superintendent  is  charged  with  the 
duty  of  ascertaining  as  best  he  can  whether  the  public  convenience  and 
advantage  would  be  jjronioted  by  th<>  proposed  trust  company  and 
wlietlier  the  men  In-hind  it  are  fit  and  })ossess  the  confidence  of  the  public. 
If  he  is  not  satisfied  of  such  fitness  and  advantage,  he  must,  within  sixty 
days  after  the  filing  of  the  certificate  with  him,  notify  the  county  ebrk 
that  he  refuses  to  issue  a  certificat*'  of  authorization  for  such  tru>t  com- 
pany. 

If  he  is  so  satisfied,  he  must  issue  the  authorization  certificate  within 
sixty  days  from  the  filing  of  the  organization  certificate,  provided  the 
organization  tax  has  been  paid  to  the  State  Treasurer  and  a  receipt 
therefor  is  shown,  and  provided  that  he  has  ascertained  by  an  examination 
that   the    recjuisite    capital    of   the    projioscd    corporation    has    been    fully 


58  TRUST    COMPANIES. 

paid  in,  in  cash.  TJie  persons  in  charge  of  organizing  the  company  must 
therefore  see  to  it  that  these  matters  are  attended  to  in  season.  The 
-company  is  forbidden  to  begin  business  until  the  authorization  certificate 
from  the  Sui)erintendent  of  Banks  has  been  received;  and  it  must  also, 
before  beginning  active  business,  file  with  the  Superintendent  a  list  of 
its  stockliolders,  giving  Ihe  name,  residence,  post  office  address  and 
number  of  shares  held  by  each  of  them  respectively,  which  list  must  be 
verified  by  the  tAvo  principal  officers  of  the  corporation. 

While  these  legal  proceedings  are  being  attended  to,  presumably  by 
the  attorney  of  the  corporators,  a  large  number  of  details  must  be  looked 
after  by  the  man  or  men  who  are  to  be  in  active  control  of  the  company. 
Stock  certificates  must  be  ready  to  give  to  the  stockholders  when  the 
subscriptions  are  fully  paid.  The  seal  of  the  company  must  be  secured. 
The  quarters  for  the  company  must  be  made  ready,  and  the  various 
books,  records  and  blanks  must  be  prepared.  Arrangements  must  be 
made  with  the  correspondents  of  the  banking  department. 

After  organization,  the  first  duty  of  the  directors  is  the  adoption  of 
a  set  of  by-laws  and  the  election  of  officers.  Before  the  actual  election  of 
officers,  there  is  usually  an  understanding  as  to  who  the  men  in  active 
control  are  to  be.  It  saves  much  time  and  trouble  if  the  by-laws  are  pre- 
pared in  advance  by  some  competent  person.  After  organization,  the 
directors  will  of  course  make  such  changes  in  such  by-laws  as  they  see 
fit  before  adopting  them,  but  they  can  work  to  much  better  purpose  with 
An  outline  already  drawn. 

By-Laws. 

The  exact  form  of  by-laws  will  of  course  vary  greatly  with  different 
companies,  many  details  depending  upon  the  size  of  the  company,  the 
probable  character  of  its  business,  etc.  Herewith  are  submitted  the  by- 
laws in  use  by  a  company  in  New  York,  having  total  assets  of  about 
eleven  millions.  They  serve  as  a  fair  sample  of  the  by-laws  of  a  progress- 
ive, up-to-date  company,  but  of  course  contain  provisions  peculiar  to 
the  company,  and  are  perhaps  longer  and  more  detailed  than 
usual.  The  article  on  officers  and  employees,  in  particular,  is  apt 
to  be  quite  different  in  smaller  companies.  Often  the  Secretary  and 
Treasurer  is  the  head  executive  officer,  the  President  being  merely  an 
honorary  office.    Sometimes  one  of  the  Vice-Presidents  is  the  active  head. 

BY-LAWS  OF  THE   FRANKLIN  TRUST  COMPANY,  OF  THE  CITY  OF 
NEW  YORK,  BOROUGH    OF    BROOKLYN. 

Amended  to  and  Adopted  February  4,  1903;  Amended,  December  9,  1903. 

ARTICLE  I. 

Stockholders. 

Section   1.     A    regular   annual   meeting  of   the   stockholders   of   the   company 

shall  be  held  at  its  office  at  10  o'clock  a.  m.  on  the  second  Wednesday  of  January 

in  each  year,  or,  if  that  be  a  legal  holiday,  then  on  the  next  business  day,  for 

the  election  of  trustees  in  the  class  whose  term  of  office  shall  then  next  expire; 

and  for  the  transaction  of  such  other  business  as  may  properlj'  be  brought  be- 


ORCiANIZATION    OF    TRIST    COMPANIES.  59 

fore  the  meeting.  Such  election  shall  he  between  the  hours  of  10  a.  m.  and  II 
a.  m.,  and  shall  be  advertised  and  <onducted  as  provided   for  by  law. 

Section  2.  Special  meetings  of  the  st.Kkhold.rs  shall  Ix-  called  and  lield  in 
the  cases  i)rovided  In-  statute,  and  may  he  called  and  h.ld  wht-never  and  a*  often 
as  the  President,  a  majority  of  the  hoard  of  trustees,  or  of  the  executive  com- 
mittee, may  deem  expedient;  and  it  shall  be  the  duty  of  tl»c  President  to  call 
such  meetings  upon  the  written  request  of  the  owners  of  record  of  a  majority 
of  the  capital   stock  of  the  company. 

SertiuH  ■>.  In  addition  to  such  other  notice,  if  any,  as  may  be  requirvKl 
from  time  to  time  by  law,  ten  days'  written  or  printed'  notice  of  the  regular 
annual  meeting  and  also  of  every  special  meetiiijr  of  the  sbM-kholdcrs  sliall  l>e 
served  jHTsonally  upon  each  stockholder  of  record,  nr  maihtl  t(»  such  sttx-kliolder 
at  his  post  office  address  as  shown  on  the  stin-k  h-tlgcr,  nr  publislicd  nt  least 
twice  not  more  than  twenty  or  less  than  ten  tlays  Iwfore  tl*e  merting.  in  Mime 
newspaper  published  in  the  Borough  of  Hrooklyn,  City  of  .New  York,  and  such 
notice  of  special  meetings  shall  state  the  objects  of  tlie  meeting. 

Section  /f.  The  holders  of  record  of  not  less  than  one-fourth  of  all  the 
capital  stock  of  the  company  issued  and  outstanding,  represented  in  person  or 
by  proxy  executed  ]>ursuant  to  the  recpiirements  of  the  Cleneral  Cori><»ration  Law, 
shall  constitute  a  quorum  for  the  transaction  of  business  at  any  meeting  of  the 
stockholders  except  in  the  cases  where  otherwis*-  provided  by  \\v  (ienernl  Cor- 
poration Law;  but  if  there  be  less  than  a  quorum  representeil  at  any  meeting, 
the  holders  of  a  majority  of  the  stock  so  represente«l  pre.M-nt  in  |)erNon  or  by 
proxy  may  adjourn  the  meeting  to  some  future  date. 

Section  7.  At  ai\y  and  all  meetings  of  the  stix'kholders,  every  registered 
owner  of  shares  may  vote  in  person  or  by  proxy  extvuted  pursuant  to  the  re- 
quirements of  the  General  Corporation  Law,  one  vote  for  each  sliare  owned  by 
him  and  standing  in  his  name,  but  no  jiroxy  shall  l)e  valid  after  the  expiration 
of  eleven  months  from  the  date  of  its  execution,  unless  the  member  executing 
it  shall  have  specified  therein  the  length  of  time  it  is  to  continue  in  force,  which 
shall   be  for  some  limited   period. 

.\t  all  elections  of  trustees  the  voting  shall  be  by  ballot,  and  a  plurality 
of  the  votes  cast   thereat   shall  elect. 

Section  0.  The  stockholders  at  each  annual  meeting  shall  also  elect,  or 
appoint,  three  persons,  who  shall  not  he  trustees  or  officers  of  tlie  company,  and 
who  need  not  be  stockholders,  to  act  as  ins|>ect(»rs  of  ehftion  at  all  the  follow- 
ing meetings  of  the  stockholders  until  the  close  of  the  next  annual  meeting.  If 
an  inspector  shall  decline  to  serve,  or  neglect  to  attend  any  meeting,  or  his  office 
shall  become  vacant,  the  President  may  appoint  an  insj>ector  in  his  place.  The 
inspectors  of  election  shall  take  charge  of  the  polls,  anti,  after  lialloting,  shall 
sign  and  acknowletlge  a  certificate  of  the  result  of  the  vote  taken,  and  shall 
return,  file  and  verify  statements  and  certificates  in  the  s{>ecial  ca.ses  as  pro- 
vided in  the  General  Corporation  Law.  Each  inspector  before  entering  uj>on 
the  performance  of  his  duties  shall  he  sworn  to  faithfully  execute  the  duties  of 
inspector  at  such  meeting  with  strict  impartiality  ami  according  to  t\v  best 
of  his  ability. 

ARTICLK  IL 
Board  ok  Tristek-s. 

Section  1.  The  bu.siness  and  affairs  of  tl»e  company  shall  be  directed  by  • 
board  of  twenty  trustees,  who  shall  l>e  elected  by  ball<»t  in  accordance  with  law 
at  the  annual  meeting  of  the  stockholders,  six  at  the  n»«-eting  of  Januar>,  1900, 
and  every  third  year  thereafter;  and  seven  at  the  nuvting  of  January.  \9H\.  and 
every  tlvird  year  thereafter,  and  seven  at  the  meeting  of  .Ianuar> ,  190:?.  and  everj" 
third  year  thereafter;  the  tenn  of  office  of  each  class  to  conmien*^  on  the  next 
succeeding  Wednesday  at  9  a.  m..  and  continue  thn-e  years  or  until  their  suc- 
ces.sors  are  elected   and   qualified. 

Each  trusttH»  must  be  a  holder  of  record  in  his  own  name  and  right  of  *t 
least  twct\ty-five  shares  of  the  caj>ital  st<Hk  of  the  company,  and  wlien  he  ceases 
to  hold   or  own   said  number  of  shares  he  slwdl   thereupon  cease  to  l>e  a   trustee. 


60  TRUST    COMPANIES. 

Section  2.  "Whenever  a  vacancy  shall  occur  in  the  board,  by  death,  resigna- 
tion, or  otherwise,  in  the  interval  between  the  annual  meetings  of  the  stock- 
holders, it  shall  be  filled  by  the  board  for  the  remainder  of  the  term,  by  election 
by  ballot  at  a  regular  meeting,  after  nomination  at  a  previous  monthly  meeting; 
or,  if  no  such  nomination  has  been  made,  after  nomination  by  the  executive 
committee  at  any  regular  meeting  of  such  committee,  held  at  least  one  week 
previous  to  such  meeting  of  the  board  of  trustees  at  which  the  election  is  to 
be  held,  and  notice  by  the  secretary  of  the  proposed  election  shall  be  sent  with 
the  notice  of  the  meeting  at  which  it  is  to  be  held. 

Section  3.  There  shall  be  a  regular  meeting  of  the  board  of  trustees  on 
the  first  Wednesday  after  the  first  Monday  of  every  month,  except  January, 
when  it  shall  be  held  on  the  third  Wednesday,  at  9  a.  m.,  or  at  such  other  day 
or  time  as  the  board  may  from  time  to  time  appoint,  to  which  a  report  shall 
be  made  by  the  President  of  the  business  and  affairs  of  the  company.  At  all 
regular  meetings  of  the  board  the  following  shall  be  the  order  of  business,  unless 
changed  by  a  vote  of  a  majority  of  the  trustees  present: 

1.  Calling  the   roll. 

2.  Reading   the   minutes   of   the   last   regular   meeting   and    of   any    special 

meeting  or  meetings  held  since  the  last  regular  meeting. 

3.  Reading  the  minutes   of  the  meetings   of  the  executive  committee   since 

the  last  meeting  of  the  board. 

4.  Report   of  the    President. 

5.  Report  of  the  Secretary, 

6.  Reports  of  committees. 

7.  Unfinished  business. 

8.  New  business. 

Section  4.  At  the  regular  meeting  of  the  board  of  trustees  on  the  third 
Wednesday  of  January  in  each  year,  after  reading  the  report  of  the  inspectors 
of  election  and  calling  the  roll,  the  first  business  shall  be  the  election  of  a  Presi- 
dent, Vice-Presidents,  and  an  Executive  Committee;  and  whenever  a  vacancy  shall 
occur  in  the  office  of  President  or  either  of  the  Vice-Presidents,  or  in  the  Ex- 
ecutive Committee,  it  shall  be  filled  at  a  regular  meeting  of  the  board,  or  at  a 
special  meeting  called  for  that  purpose  after  notice  in  either  case  by  the  Secre- 
tary of  the  proposed  election  and  the  meeting  at  which  it  is  to  be  held.  Such 
elections  shall  be  by  ballot. 

Special  meetings  of  the  board  of  trustees  may  be  called  at  any  time  by  the 
President,  and  shall  be  called  by  him  upon  written  request  of  three  trustees. 

ARTICLE  III. 

ExECUTivTE  Committee. 

Section  1.  There  shall  be  an  executive  committee  consisting  of  the  Presi- 
dent ex-officio  and  four  trustees  elected  annually  by  the  board  of  trustees,  who 
shall  organize  by  the  election  of  their  own  chairman  (who  shall  not  be  the 
President),  and  shall  hold  their  ofBces  until  their  successors  are  elected  in 
their  places.     Vacancies  in  the  committee  shall  be  filled  by  the  board  of  trustees. 

Section  2.  The  executive  committee  shall  have  and  exercise  in  the  intervals 
between  the  meetings  of  the  trustees  all  the  powers  of  the  board  which  can 
lawfully  be  delegated,  and  shall  have  general  supervision  of  and  direct  the  affairs 
and  practical  operation  of  the  company.  It  shall  superintend  and  advise  all 
investments  of  the  funds  of  the  company,  and  of  trust  funds  in  charge  of  the 
company  for  investment,  and  shall  supervise  all  special  trusts;  and  no  guardian- 
ship, receivership,  or  special  trust,  other  than  by  orders  of  a  court  having 
jurisdiction,  shall  be  accepted  by  the  company  without  the  committee's  approba- 
tion and  concurrence,  except  that  in  the  intervals  between  the  meetings  of  the 
committee  such  trusts  may  be  accepted  by  the  President  upon  approval  by  the 
counsel,  such  action  to  be  reported  at  the  next  meeting  of  the  committee. 

The  executive  committee  may,  in  its  discretion,  authorize  the  President 
to  make  such  loans   and   investments   as   are  permitted   by   law   and   report  the 


ORGAXrZATIOX    OF    TULST    (  OMI'ANIES.  61 

same  at  its  next  following  meetinp,  and  its  cliairnian  siiall,  durinff  the  pleasure 
of  the  comniittee,  have  such  i)owtr  and  perforni  sneh  lawful  acts  as  the  com- 
mittee may  deem  necessarj-  for  the  proi)er  transaetjon  of  the  current  husiness 
of   tlie    company. 

Secliuii  .>'.  The  executive  conwnittee  shall  designate  from  time  to  time  the 
banks  or  financial  institutions  in  wiiich  deposits  of  the  moneys  of  the  company 
shall  be  made. 

Section  4.  The  executive  connnittee  shall  meet  once  every  week,  and  at  such 
other  times  as  it  may  appoint,  or  may  i)e  called  i»y  the  President  or  its  chair- 
man. A  majority  of  tin'  committee  shall  form  a  ({uoruni  for  husiness,  and  reg- 
ular minutes  of  its  proceedings  shall  he  kept,  which  sliall  always  Ih»  o|H-n  to  the 
inspection  of  any  trustee,  and  shall  he  read  at  the  following  meeting  of  the 
board  of  triistees. 

Section  '>.  Subject  to  the  ;q)i)roval  of  the  board  of  trustees  at  it.s  next 
following  meeting,  the  executive  connnittee  may  fix  the  compensation  imd  define 
the  duties  not  otherwise  enumerated  of  the  ofhVers.  clerks  and  eniplo>«-es  of  tl»e 
coni])any,  who  shall  give  such  bonds  as  the  connnittee  may  retpiire'as  further 
provided  for  in  Article  ^'II.,  Section  I.  All  ag«-nts  or  employees  of  tla-  com- 
pany shall  he  subject  to  removal  by  the  executive  committee,  with  or  witliout 
assigiuuent  of  cause  or  reason    for  such  action. 

ARTICl-K  IV. 

E  X  A  M  I  N  I  N  0    Co  M  .M I  TTi:  f. . 

Section  J.  There  shall  be  an  examination  made  it.  Decemlwr  and  Jime 
of  each  year,  of  the  books,  accounts,  cash,  and  securities  of  the  company,  by 
a  connnittee  to  be  appointed  each  half  year  by  the  boanl  of  trustees  for  that 
purpose,  who  shall  rei)ort  to  the  board  the  results  of  such  examination,  aiul  sign 
and  verify  the  scnii-aiiiuial  stati-nient  to  the  Hanking  l)e|>artment  ntpiin-il  by 
statute,  and  the  committee  last  ai)pointed  may  make  sn<'h  other  examination^  at 
such  other  times  as  it  may  deem  lu'cessary. 

Section  ?.  Trustees  while  serving  on  the  executive  connnittee  shall  l>e  in- 
eligible for   appointment   on   the  exaniiuing  connnittee. 

AHTICl.K   V. 

Other   Co.mmittff.s. 

Section  7.  The  board  of  trustees  may  from  time  to  time  direct  the  creation 
of  other  committees,  and  may  a]ipoint  from  among  their  number,  or  otherwise, 
such  other  conunittees,  standing  or  special,  as  nuiy  be  deemed  proper,  and  may 
direct  and  delegate  to  any  such  committee  such  powers  and  duties  as  may 
seem  expedient,  and   revoke  the  sanie  and  terminate  such  duties  nt  pleasure. 

AUTICLE  VI. 

CotNSKI.. 

Section  1.  Coinisel  shall  be  apj>ointed  by  the  executive  committee,  at  stated 
annual  compensation,  for  general  .advice  to  the  officers,  executive  conuuittee  or 
board   of  trustees   in   the  performance   of   their  duties. 

Section  .'.  In  all  cases  of  loans  on  bond  and  mortgage,  excepting  those 
where  the  title  is  guaranteed  by  a  cori)oration  approved  by  the  boanl  of  trus- 
tees, an  abstract  of  title.  ai>pro"ved  by  the  couum-I  of  the  company,  shall  be  de- 
posited  with  the  conipany. 

.\UTICT.K  VII. 
Okkickhs  ano  I'.mim.oyev.s. 

Section  1.  The  officers  of  the  conipany  shall  l>e  a  President,  n  Vice-President, 
a  second  Vice-President,  a  Secretary,  two  .Vssistnnt  .Secretaries  and  a  Trust  Offi- 
cer, all  of  whom,  excejit  the  President,  and  Vice-President.s,  shall  hold  their 
respective  offices  dnrii\g  the  pleasure  of  the  hoard  of  trustees  or  of  the  executive 


62  TRUST    COMPANIES. 

committee.  The  President  and  the  Vice-Presidents  shall  be  trustees  of  the  com- 
pany, and  shall  hold  their  offices  respectively  for  one  year  from  the  third  Wednes- 
day of  January  in  each  year,  and  until  others  are  elected  in  their  stead.  Bonds 
satisfactory  to  the  executive  committee,  and  in  amount  not  less  than  ten  thousand 
dollars,  shall  be  given  by  the  Secretary,  Assistant  Secretaries  and  Trust  Officer, 
and  not  less  than  five  thousand  dollars  by  each  clerk.  New  or  additional  securi- 
ties may  at  any  time  be  required  by  the  executive  committee. 

Section  2.  The  election  of  officers  shall  take  place  on  the  third  Wednesday 
of  January  in  each  year  as  provided  for  in  Article  II,  Section  4,  and  vacancies 
shall  be  filled  as  therein  provided  for.  The  salaries  or  compensation  of  all 
officers  and  employees  of  the  company  shall  be  fixed  by  the  executive  committee, 
subject  to  the  approval  of  the  board  of  trustees  as  provided  for  in  Article 
III.,  Section  5. 

Section  3.  The  executive  committee,  subject  to  the  approval  of  the  board 
of  trustees,  may  from  time  to  time  appoint,  or  authorize  the  President  to  appoint, 
such  agents  and  employees  as  it  may  deem  best,  and  may  prescribe  the  duties 
of  the  officers,  agents  and  employees  of  the  company.  All  agents  and  employees 
of  the  company  shall  be  subject  to  removal  as  provided  for  in  Article  III., 
Section  5. 

Section  4.  The  President  shall  be  the  chief  executive  of  the  company.  He 
shall  preside  at  all  meetings  of  the  stockholders  and  of  the  board  of  trustees, 
and  he  shall  be  a  member  ex-officio  of  all  standing  committees,  except  the 
examining  committee.  He  shall  have  general  charge,  supervision  and  control 
of  the  business  and  affairs  of  the  company,  see  to  the  proper  and  safe  custody 
of  the  securities  of  the  company  and  in  its  charge,  subject,  however,  to  the 
authority  and  control  of  the  board  of  trustees  and  of  the  executive  committee; 
and,  subject  to  review  of  his  action  by  said  board  and  committee,  he  may  ajipoint, 
suspend  and  discharge  all  agents  and  employees.  He  may  call  special  meetings 
of  the  trustees  whenever  he  may  deem  it  proper,  and  shall  call  them  whenever  any 
three  of  the  trustees  shall  request  him  in  writing  to  do  so,  of  which  meetings 
at  least  one  day's  notice  shall  be  given. 

Section  5.  It  shall  be  the  duty  of  the  President  or  a  Vice-President  to  sign 
all  certificates  issued  for  deposits  of  money,  and  all  checks  drawn,  except  checks 
for  dividends  and  coupons,  which  shall  be  signed  by  any  two  officers  of  the 
company;  and  to  keep,  or  cause  to  be  kept,  a  daily  record  of  all  moneys  received 
and  paid  out  by  the  company.  He  shall  countersign  or  certify  all  bonds  issued 
by  the  company  as  trustee. 

Whenever  any  stock  shall  be  hypothecated  with  the  company  as  security 
for  a  debt  or  loan,  the  President  is  authorised  at  his  discretion  to  cause  the 
transfer  of  same  to  the  company.  He  shall  also  have  power  to  make  any  and 
all  transfers  of  the  securities  of  the  company,  which  may  be  authorized  by  the 
executive  committee. 

He  shall  at  all  times  exercise  such  general  direction  and  supervision  over 
the  business  of  the  company  as  its  interests  and  security  may  require;  and  in 
all  cases  where  the  duties  of  the  subordinate  officers  and  agents  of  the  company 
are  not  specially  prescribed  by  the  by-laws  or  resolutions  of  the  board  »f 
trustees  or  of  the  executive  committee,  they  shall  obey  the  orders  and  instructions 
of  the  President. 

Section  6.  The  President  shall  have  the  custody  of  the  seal  of  the  com- 
pany, and  shall  have  the  power  to  affix  the  same  to  certificates  of  the  capital 
stock  of  the  company;  to  certificates  acknowledging  satisfactions  of  judgments 
and  mortgages  and  to  assignments  of  mortgages;  to  releases  of  portions  of 
mortgaged  premises,  to  transfers  and  powers  of  attorney  for  the  transfer  of 
hypothecated  stocks,  and  for  the  collection  of  interest  and  dividends;  to  legal 
proceedings;  to  any  assignments  of  mortgages  or  stocks  to  the  Superintendent 
of  the  Banking  Department;  also  to  all  deeds  and  releases  of  any  real  estate, 
or  portions  thereof,  which  have  been  or  may  be  conveyed  to  the  company  in  or 
by  any  trust  deed  or  mortgage,  and  to  any  contract  in  relation  to  any  real 
estate  or  portions  thereof,  so  conveyed,  when  such  deed,  release  or  contract  is 
authorized  or  required  by  the  provisions  of  said  deed  of  trust  of  mortgage;  to 
certificates  of  deposit;  to  receipts  for  money  or  property;  to  acceptances  of  ap- 


ORGANIZATION    OK    TRUST    COMPANIES.  6S 

pointment,  as  executor,  adniiiiistrator,  guardian,  receiver  or  otiier  special  trust, 
ordered  by  a  court  having  jurisdiction,  and  to  such  transfers  of  the  securities 
of  the  company  as  may  be  aiithorized  by  the  executive  committee.  The  seal 
of  the  company  shall  not  \>e  affixed  to  any  other  deed,  conveyance  or  instrument 
whatever,  unless  by  autiiority  of  the  board  or  executive  committee. 

Sfcfion  7.  In  tlie  case  of  the  death,  alisence,  or  disability  of  tl»e  President, 
his  powers  shall  be  exercised  and  his  duties  discharged  by  the  Vice-President,  and 
in  like  manner  the  second  Vice-President  shall  have  tiie  jmwers  and  duties  of 
the  President,  in  the  event  of  the  absence  or  disaiiility  of  tlw  l'resi(b-nt  and 
Vice-President;  and  in  the  event  of  the  death,  absence,  or  disability  of  the 
President,  Vice-President  and  second  ^'ice-President,  the  executive  conunittee 
for  the  time  being  shall  appoint  one  of  their  numtx-r  to  act  as  I'n-sident  until 
the  board  of  trustees  shall,  by  a  majority  vote  of  tlieir  number,  apj)oint  a  trustee 
to  act   as   President  pro   teniporv. 

The  said  Vice-Presidents  shall  perform  all  such  other  duties  as  may  be 
assigned  to  them  from  time  to  time  by  the  board  or  the  executive  ccMumittee. 
One  of  the  ^■ice-P^esidpnts  shall  be  a  salaried  officer  of  the  company,  ami  shall 
devote  his  entire  time  and  attention  to  the  busiiu-ss.  He  shall  assist  the  Presi- 
dent, as  he  mav  be  directed  from  time  to  time.  He  shall,  under  direction  of 
the  President,  be  charged  with  the  administration  of  the  business  an<I  affairs 
of  the  company.  He  shall  liave  such  other  duties  as  may  be  prescrilwd  by  the 
board  of  trustees,  the  executive  conunittee,  or  the  President. 

Section  S.  The  Secretary  shall  be  the  custodian  of  the  records  of  the  com- 
pany, unless  otherwise  provided  by  the  by-laws,  or  directed  by  the  Iniard  of 
trustees,  or  the  executive  committee.  He  shall  keep  the  records  of  all  votes 
and  proceedings  of  the  sto<khol<lers  and  of  the  board  of  trustees  and  of  the 
executive  conunittee  in  books  ke])t  for  that  j)urposc.  He  shall  give  due  notice 
of  all  meetings  of  the  stockholders  and  of  the  board  of  trustees  and  of  the  ex- 
ecutive conunittee. 

He  shall  supervl.se  the  receipts  of  all  moneys,  and  tlie  issuing  of  vouchers  or 
certificates  therefor,  and  shall  keep  a  record  daily  of  all  such  receij»ts  and  vouchers 
or  certificates.  He  shall  examine  and  countersign  all  checks  for  tlic  payment  of 
money,  excej)t  checks  for  dividends  and  coujions,  which  shall  In-  sigmnl  by  any 
two  officers  of  the  company,  and  no  money-voucher  or  certificate,  except  as  be- 
fore provided,  shall  be  issued  from  the  office  without  his  signature  thereon. 

He  shall  supervise  the  deposits  of  all  money  lodgt-d  daily  in  bank,  ami  com- 
pare the  entry  thereof  with  the  book  on  its  return  from  the  bank,  and  also  with 
the  record  of  the  receipts  of  the  day. 

He  shall  have  the  custody,  uiuler  the  control  and  supervision  of  the  President, 
or  a  Vice-President,  of  all  sec\irities  lodged  as  collaterals  for  loans  made  by  the 
company. 

Sfction  9.  He  sh.dl  also  have  the  supervision  of  the  st«H-k  ami  bonti  ledgers, 
and  the  i)roj)er  filling  out,  completion  and  delivery  of  all  certificates  of  stocks 
taking  the  })ropcr  vouchers  therefor— also  the  payments  of  all  dividends.  He 
shall  perform  such  other  duties  as  may  l>e  assigned  to  him  by  the  \ice-Presi- 
dents.  President,  executive  conunittee,  or  board  of  trusters. 

Section  10.     The   .Assistant   .Secretaries  shall  assist  the  Secretary. 

In  the  absence  or  disability  of  the  Secretary,  an  .\ssistant  Secretary  shall 
have  the  powers  and  perform  the  duties  of  the  office.  The  .\ssistant  .S«>cr.taries 
shall  perform  such  other  duties  a.s  may  be  assigned  to  tliem  by  the  Vice-Presi- 
dents, President,  executive  committee,  or  board  of  trustees.  In  case  of  the 
absence  or  disability  of  the  Secretary  and  both  Assistant  Secretaries,  the  Presi- 
dent shall  designate  such  trustee,  officer  or  employee  of  the  company  as  he  may 
deem  proper  to  act  as  Secretary  firo  Itnifxirt-.   with  the  like  powers  and  duties. 

Section  11.  The  Trust  Officer  shall  give  his  special  attention  and  supervisioji 
to  the  various  trust  accoimts  opened  in  the  office,  sec  that  all  entries  of  debits 
and  credits  are  correctly  made  and  projierly  registenMl,  and  all  trust  records 
properly  nuide  and  kept.  He  shall  have  general  charge  of  the  transfers  and 
registries  of  all  stocks  and  bonds,  the  exchange  of  bonds,  the  payment  oi  inter- 
est of  all  registered  bonds  and  coupons  pai<l  at  the  office  of  the  company.  He 
shall  countersign  all  trust  checks  issued,  except  coupon  clx-cks.     He  shidl  perfoiro 


64  TRUST    COMPANIES. 

such  other  duties  as  may  be  assigned  to  him  by  the  Vice-Presidents,  President, 
executive  committee,  or  board  of  trustees.  In  case  of  the  absence  or  disability 
of  the  Trust  Officer,  the  President  shall  designate  such  trustee,  officer  or  em- 
ployee of  the  company  as  he  may  deem  proper  to  act  as  Trust  Officer  2»'o  tempore, 
witli  the  like  powers  and  duties. 

ARTICLE   VIII. 
Conduct  of  Business. 

Section  1.  No  loan  on  bond  and  mortgage  shall  be  made  without  the  ap- 
proval and  concurrence  of  the  President,  and  the  executive  committee,  and  in 
all  cases  of  loans  on  bond  and  mortgage,  except  where  the  title  is  guaranteed 
by  a  corporation  approved  by  the  board  of  trustees,  an  abstract  of  title  ap- 
proved by  the  counsel  of  the  company  shall  be  deposited  with  the  company. 

All  agreements  or  instruments  of  trust  shall,  when  required  by  the  Presi- 
dent, be  examined  and  approved  by  the  counsel  of  the  company  before  the 
acceptance  or  execution  thereof. 

Section  2.  No  loan  shall  be  made  to  any  member  of  the  board  of  trustees 
or  officer  of  the  company. 

Section  3.  All  moneys  of  the  company,  or  under  its'  dharge,  deposited  in 
financial  institutions  designated  by  the  executive  committee,  shall  be  deposited 
therein  to  the  credit  of  the  company  by  its  corporate  name. 

Section  4.  Every  expense  incurred  or  paid  exceeding  two  hundred  and 
fifty  dollars  shall  be  reported  to  the  executive  committee  at  its  next  meeting 
after  the  making  of  such  obligation  or  disbursement. 

Section  5.  Certificates  of  money  received  on  deposit,  specifying  the  dura- 
tion and  terms  of  the  deposit,  shall  be  issued  when  required  by  the  person  making 
the  deposit;  but  in  such  cases  the  money  received,  shall,  when  due,  be  payable 
only  on  the  production  of  the  original  certificate,  or  its  substitute  if  the  original 
be  lost  or  destroyed. 

All  certificates  of  deposit  previous  to  their  being  issued  shall  be  registered 
in  certificate  books  to  be  kept  for  that  purpose,  which  books  shall  be  prepared 
with  sufficient  stub-margins,  in  which  each  certificate  shall  be  numbered,  registered 
and  described,  and  where  all  payments  thereon  shall  be  recorded;  and  all  certifi- 
cates when  paid  in  full  shall  be  cancelled,  defaced  and  filed  away. 

Section  6.  If  any  person  shall  apply  for  certificate  of  stock  of  the  company, 
or  a  certificate  of  deposit,  to  be  issued  in  lieu  of  one  lost  or  destroyed,  he 
shall  make  an  affidavit  of  the  facts  and  circumstances  of  the  loss  or  destruction; 
he  shall  advertise  in  one  or  more  daily  public  newspapers  to  be  designated  by 
the  President,  for  the  period  of  six  weeks,  twice  in  each  week,  an  account  of 
the  loss  or  destruction,  describing  the  certificate  and  calling  upon  all  persons 
to  show  cause  why  a  new  certificate  should  not  be  issued  in  lieu  of  that  lost  or 
destroyed;  and  he  shall  file  with  the  company  his  affidavits  and  the  advertisement 
above  required,  with  proof  of  its  due  publication,  and  shall  give  to  the  company 
his  bond  of  indemnity  with  one  or  more  sureties  satisfactory  to  the  President, 
in  double  the  amount  of  the  certificate,  against  any  damage  that  may  arise 
from  issuing  a  new  certificate;  whereupon  the  President  may  issue  a  new  certifi- 
cate of  the  same  number  and  tenor  as  that  said  to  be  lost  or  destroyed,  and 
specifying  that  it  is  in  lieu  thereof. 

Section  7.  No  interest  on  any  bond  and  mortgage  to  the  company  shall  be 
allowed  to  remain  overdue  longer  than  thirty  days  without  a  foreclosure  or  suit 
being  ordered  by  the  President,  unless  a  longer  delay  shall  be  directed  by  the 
executive  committee.  And  it  shall  be  the  duty  of  the  Secretary  to  notify  the 
executive  committee  of  any  such  default  in  payment  of  interest  or  principal  of 
any  loan  on  bond  and  mortgage. 

Any  other  loan  not  paid  at  its  maturity  shall  be  reported  by  the  Secretary 
to  the  executive  committee  at  its  meeting  next  following  such  default. 

Section  8.  Books  of  transfer  shall  be  kept,  in  which  all  transfers  of  capital 
stock  and  of  certificates  of  deposit,  when  assignable,  shall  be  made  and  entered 
by  the  persons  entitled  to  make  such  transfers,  or  by  their  attorneys;  but  no 
such  transfer  shall  be  permitted  until  the  original  certificate  shall  be  surrendered 
and  cancelled. 


ORGANIZATION    OF    TKLST   COMPANIES.  65 

Section  9.  The  President,  or  such  other  trustee  as  mav  be  designated  for 
the  purpose  by  resolution  of  the  \umn\  of  trustees  or  of  the  executive  committee, 
may  become  a  director  or  trustee  in  any  corporation  of  which  this  company 
is  a  stociiholder  or  creditor,  for  tiie  jjurpose  of  representing  therein  the  inter- 
ests of  this  company. 

ARTICLE  IX. 
Capital  Stock. 

Section  1.  Tiie  interest  or  ownershij)  of  each  shareholder  of  this  company 
shall  be  evidenced  by  certificates  of  shares  of  the  capital  stock  of  the  company. 
No  certificate  shall  be  valid  unless  signed  by  the  President  or  one  of  the  Vice- 
Presidents,  and  the  Secretary  or  one  of  the  Assistant  Secretaries,  and  sealed 
with  the  company's  seal. 

Section  2.  All  such  certificates  shall  be  issued  in  consecutive  order  from 
the  certificate  book,  and  shall  be  numbered  and  registered  in  the  order  in  which 
they  are  issued,  and  on  the  stub  of  each  certificate  issued  shall  be  entered  the 
name  of  the  person  owning  the  shares  represented  by  such  certificate,  with  the 
number  of  shares  and  the  date  thereof,  and  in  case  of  cancellation  the  date 
of  cancellation.  A  receipt  for  each  certificate  issued  shall  be  duly  signed  on  or 
attached  to  the  stub  of  the  certificate  book,  and  all  <-ertificHtes  exchanged  or 
surrendered  shall  be  cancelled  and  pasted  in  their  original  places  in  the  certifi- 
cate book,  and  no  new  certificate  issued  until  the  old  certificate  or  certificates 
for  the  same  number  of  shares  shall   have  been   surrendered   and  cancelled. 

Section  S.  Shares  in  the  capital  stock  of  the  comjmiiy  shall  In?  transferred 
only  on  the  books  of  the  comjiany  by  the  holder  in  person  upon  surrender  and 
cancellation  of  certificates  for  a  like  number  of  shares,  or  by  his  attnmev  with 
like  surrender  and  cancellation  of  such  certificates  with  duly  executed  power  to 
transfer,  endorsed   thereon  or  attached   thereto. 

Section  /,.  All  certificates  of  stock  issued  by  the  company  shall  be  counter- 
signed by  such  bank  or  other  institution  as  shall  be  from  time  to  time  designated 
by  the  executive  committee  as  registrar  of  transfers,  and  no  certificate  of  stock 
shall  be  binding  upon  the  company  or  have  any  valiility  iintil  so  countersigned. 

ARTICLE  X. 

DiVIDEKDS    AND    CmSIXG    OF    TrANSKEB    BoOKS. 

Section  1.  The  board  of  trustees  may  declare  dividends  from  the  net 
profits  of  the  company  whenever  they  shall  deem  it  expedient. 

Section  2.  The  transfer  books  of  the  company  shall  l>e  closed  for  such 
length  of  time  as  the  board  of  trustees  may  from  time  to  time  determine  as 
necessar}'  before  the  j>aynKnt  of  dividends,  and  before  meetings  of  the  stock- 
holders for  elections. 

ARTICLE  XI. 

Amexd.mekts  to  By-L.kws. 

No  new  by-laws  shall  be  adopted,  nor  shall  any  alteration  be  made  in  the 
by-laws,  except  upon  notice  stating  the  proj>osed  amendment  given  at  a  previous 
regular  meeting  of  the  board  of  triistees,  or  upim  recommendation  of  the  execu- 
tive committee,  and  notice  mailed  to  each  trustee  not  less  than  five  days  in 
advance  of  any   regular  or  special  meeting   of  the  board. 

The  bv-la\vs  are  drawn  up  by  the  directors  of  tlu-  company,  who  have 
power  to  determine  their  form,  provided,  of  course,  that  they  are  not 
contrary  to  law.  In  New  York  the  capital  stock  "must  In*  at  least  $300,- 
000;  provided,  however,  that  a  corporation  with  a  capital  of  not  less  than 
$ti00.000  may  be  organized  in  any  city  containing  more  than  100,000  in- 
habitants and  less  than  2">0,000  inhabitants,  and  a  corporation  may  be 
5 


66  TRUST    COMPANIES. 

organized  with  a  capital  of  not  less  than  $150,000  in  any  city  containing 
more  'than  25,000  inhabitants  and  less  than  100,000  inhabitants,  and 
with  a  capita]  of  at  least  $100,000  in  a  city  or  town  the  population  of 
which  does  not  exceed  25,000  inhabitants." 

The  laws  of  New  York  prescribe  that  the  number  of  directors  must 
be  not  less  than  thirteen  nor  more  than  thirty;  the  exact  number,  within 
these  limits,  being  left  for  determination  by  the  by-laws  of  each  com- 
pany. The  number  necessary  to  form  a  quorum  may  be  determined  by 
the  by-laws  or  organization  certificate,  but  "such  quorum  shall  not  be 
less  than  one-third  of  such  board  of  directors,  and  in  no  case  less  than 
seven."  No  person  can  be  a  director  who  is  not  the  holder  of  at  least  ten 
shares  of  the  stock.  "The  persons  named  in  the  organization  certificate, 
or  such  of  them  respectively  as  shall  become  holders  of  at  least  ten 
shares  of  such  stock,  shall  constitute  the  first  board  of  directors,  and 
may  add  to  their  number  not  exceeding  the  limit  of  thirty,  and  shall 
severally  continue  in  office  until  others  are  elected  to  fill  their  respective 
places."  Within  six  months  from  the  commencement  of  business  they 
must  classify  themselves,  by  lot,  into  three  classes,  as  nearly  equal  as 
may  be.  The  term  of  office  of  the  first  class  shall  expire  on  the  third 
Wednesday  of  January  next  following  such  classification;  the  term  of 
the  second  class  expires  one  year  thereafter,  and  that  of  the  third  class 
two  years  thereafter.  As  the  terms  of  the  various  members  of  the  board 
expire,  others  are  elected  to  fill  their  places  by  the  stockholders,  who 
may  vote  in  person  or  by  proxy.  Proper  notice  of  the  regular  meetings 
for  such  elections  is  required.  If  the  stockholders  fail  to  elect  new  mem- 
bers at  the  appointed  time,  the  directors  have  power  to  fill  the  vacancies, 
as  well  as  to  fill  any  vacancies  occurring  in  the  interval  between  elections. 
Each  director  "shall  take  an  oath  that  he  will,  so  far  as  the  duty  devolves 
on  him,  diligently  and  honestly  administer  the  affairs  of  such  corpora- 
tion, and  will  not  knowingly  violate,  or  willingly  permit  to  be  violated, 
any  of  the  provisions  of  law  applicable  to  such  corporation,  and  that  he 
is  the  owner  in  good  faith,  and  in  his  own  right,  of  the  number  of 
shares  (ten)  required  bj-  this  section,  subscribed  by  him  or  standing  in 
his  name  on  the  books  of  the  corporation,  and  that  the  same  is  not 
hypothecated  or  in  any  way  pledged  as  security  for  any  loan  or  debt." 
A  certified  copy  of  this  oath  must  be  transmitted  to  the  Superintendent 
of  Banks  and  filed  and  preserved  in  his  office. 

Care  in  the  Selection  of  DinECTORS. 

The  choice  of  directors  is  a  matter  of  supreme  importance  to  the  in- 
terests of  the  company.  Unless  they  are  men  of  known  integrity  and 
business  capacity,  the  company  will  have  difficulty  in  making  a  success. 
It  has  already  been  urged  that  the  stockholders  of  the  company  should 
be  men  of  good  standing  in  the  communit}',  and  the  best  men  among 
these  should  be  chosen  as  directors.    Upon  them  will  devolve  the  responsibil- 


ORGANIZATION    OF    TRUST   COMPANIES.  67 

ity  for  the  general  management  of  the  company.  They  will  choose  the 
officers  who  will  have  charge  of  the  active  management  of  the  company, 
but  both  the  stockholders  and  the  public  expect,  and  have  right  to  ex- 
pect, that  the  directors  will  see  to  it  that  these  officers  manage  the  com- 
pany in  the  best  way.  No  man  has  a  right  to  accept  the  election  as  a 
director  of  a  trust  company  who  is  not  willing  to  give  enough  of  his  time 
and  attention  to  know  that  matters  are  being  properly  conducted.  One 
cannot  too  strongly  deprecate  the  practice  followed  by  some,  of  accept- 
ing places  on  such  boards  without  intention  of  giving  any  thought  or  time 
to  the  trust  thus  accepted.  Suits  at  law  have  been  instituted  against 
such  careless  officials  when  their  inattention  has  permitted  losses  to  stock- 
holders and  di'})ositors  alike,  and  the  laws  of  some  States  hold  them  re- 
sponsible. 

Whatever  the  legal  aspect  of  the  case  may  be,  one  who  accepts  such 
a  trust  and  then  gives  it  no  attention,  is  morally  guilty  of  crinunal  care- 
lessness. He  jeopardizes  the  property  of  others,  and  perhaps  the  very 
means  of  subsistence  of  widows  and  orphans. 

Having  completed  the  adoption  of  by-laws,  decided  the  membership 
of  the  first  board  of  directors,  and  chosen  officers,  and  carried  out  the 
legal  requirements  already  described,  the  organization  of  the  trust  com- 
pany is  complete.  While  these  things  are  Ining  attended  to,  it  is 
presumed,  as  already  stated,  that  the  material  equipnunt  of  the  company 
is  being  made  ready  by  those  who  are  to  be  in  charge  of  it.  The  offices 
of  the  company  will  be  more  or  less  elaborate  in  their  arrangements,  ac- 
cording to  circumstances.  It  is  not  often  that  too  much  money  is  spent 
in  making  the  quarters  attractive  and  convenient,  both  to  customers  and 
to  the  workers.  The  general  public  is  certain  to  judge  an  institution 
largely  by  appearances,  and  an  attractive  looking  suite  of  rooms  is  very 
apt  to  add  largely  to  the  success  of  the  company.  Much  difference  in 
the  customs  in  this  matter  is  observable  in  different  cities.  In  some  it  is 
the  usual  thing  for  banks  and  trust  companies  to  be  equipped  in  elab- 
orate fashion.  In  such  cities  a  new  institution  must,  of  course,  sec  to  it 
that  its  quarters  compare  favorably  with  others.  In  some  cities  com- 
paratively little  attention  is  given  to  making  the  offices  attractive  and 
convenient.  A  new  institution  starting  in  such  a  city  will  manifestly  be 
the  gainer  by  starting  an  improvement  in  this  matter. 

Many  of  the  larger  trust  companies  of  to-day  own  the  ir  own  build- 
ings, which  are  constructed  specially  for  their  use.  The  advisability  of 
this  depends  largely  upon  local  conditions,  but  in  most  communities  has 
much  to  commend  it.  A  building  is  an  asstl  tliat  people  can  see,  and 
tends  to  give  a  feeling  of  confidence. 

The  vaults  of  the  company  shoiild  be  strictly  up-to-date,  and  large 
enough  not  for  the  present  only,  but  for  jirobable  future  needs.  The 
mistake  of  having  them  too  small  is  much  more  common  than  that  of 
having  them  too  large.  A  trust  company  will  ordinarily  have  use  for  a 
large'-  vault   or  vaults  than   an  ordinary   bank.  Wcausc  of  the   securities 


68  TRUST    COMPANIES. 

of  others  that  must  be  cared  for  in  addition  to  its  own  securities  and 
records.  If  only  one  vault  is  erected,  that  part  used  by  the  banking  de- 
partment should  be  separated  by  a  grill  from  the  portion  used  by  the 
trust  department.  If  a  safety  deposit  department  is  to  be  conducted,  of 
course  a  special  equipment  is  necessary. 

Organization  of  Trust  Companies  by  Special  Charter. 

As  already  stated,  trust  companies  in  some  States  are  incorporated 
only  by  special  charter  granted  by  the  Legislature.  In  these  States, 
after  it  has  been  decided  to  apply  for  a  charter,  a  committee  of  the  per- 
sons interested  is  appointed  to  draw  up,  under  legal  advice,  an  act  of  in- 
corporation involving  such  provisions  as  are  wanted  (being  sure  to 
specify  a  wide  range  of  powers),  and  to  arrange  for  the  introduction  of 
the  bill  to  the  Legislature  by  some  member  thereof.  If  the  Legislature 
sees  fit  to  grant  the  charter,  either  as  presented  or  amended  by  the 
Legislature,  the  company  is  usually  authorized  to  begin  business  as  soon 
as  it  wishes  after  the  passage  of  the  act. 

Such  special  acts,  in  the  absence  of  general  laws  regulating  the  busi- 
ness of  trust  companies,  define  the  powers  and  limitations  of  the  com- 
pany. If  general  laws  for  such  regulation  of  trust  companies  exist  in 
the  State,  then  the  special  act  merely  names  the  corporators,  creates  them 
a  corporation  under  the  name  chosen,  and  confers  upon  them  the  author- 
ity to  transact  a  trust  company  business  under  the  general  laws  in  force 
relating  to  such  corporations. 

The  charters  of  companies  established  in  the  early  years  of  the  trust 
company  movement  have  had  added  to  them  numerous  amendments  grant- 
ing larger  powers,  as  the  Legislatures  became  more  liberal  in  such  mat- 
ters. The  amendments  are  passed  by  the  Legislature  in  the  form  of 
special  acts,  and  become  part  of  the  charter  upon  their  formal  accept- 
ance by  the  company.  In  cases  where  general  laws  regulating  the  busi- 
ness of  trust  companies  have  been  passed  subsequent  to  the  granting  of 
special  charters,  such  general  laws,  or  parts  of  them,  become  part  of  the 
charter  of  the  company  upon  their  acceptance  by  the  latter.  The  follow- 
ing charter  of  a  large  Boston  company,*  doing  both  a  banking  and  a 
trust  business,  will  illustrate  the  usual  form  and  scope  of  these  special 
charters  and  of  acts  amending  same: 

COMMONWEALTH    OF    MASSACHUSETTS. 

THE  NEW  ENGLAND  TRUST  COMPANY. 

Act  of  Incorporation,  Granted  April  22,  1869. 
Section   1.     Nathaniel  Thayer,  John  C.  Lee,  Benjamin  T.   Reed,  their  asso- 
ciates and  successors,  are  hereby  made  a  corporation  by  the  name  of  "The  New 
England  Trust  Company,"  to  be  located  in  the  City  of  Boston,  for  the  purpose 
of  holding  property  in  trust,  and  for  other  purposes  hereinafter  set   forth;  and 


*  Trust  companies  in  Massachusetts  were  formerly  incorporated  only  by 
special  act.  They  may  now  be  incorporated  under  the  general  incorporation  law 
for   trust   companies,    signed   by    the    Governor  May  25,  1904. 


ORGANIZATION    Or    TRUST    COMPANIES  wj 

subject    to    all    the    duties,    restrictions    and    liabilities    set    forth    in    all    ^nrral 
laws  which  now  are  or  may  hereafter  be  in  force  in   relation  to  such  corporations. 

CAPITAL. 

Section-  2.  The  capital.  sto<k  of  said  corporation  hhall  l>e  an  amount  not 
exceeding  in  the  whole  the  sum  of  one  million  dollars  (aj  amended  March  SO, 
1S71),  divided  into  ten  thousanil  shares  of  one  hundred  dollars  eacli,  and  the 
same  shall  be  ])Jiid  for  at  such  time  and  in  such  manner  us  tin-  U.ard  of  directors 
shall  decide;  provided,  that  no  business  shall  Ik-  transacted  bv  the  corporation 
until  the  whole  amount  is  subscribed  for,  and  at  least  one  hundred  thousand 
dollars  shall  have  been  actually  paid  in  and  invested  accordinjr  to  law,  and  no 
shares  shall  be  issued  nor  dividends  made  until  the  par  value  of  such  shares  simll 
have  been  actually  paid  in  cash. 

rOWEUS. 

Sect-ox  S.  Tlic  s.iid  c.irjxiration  shall  h,i>,  ^■.,^^,  i  i..  nr.n.-  .mil  fn.lii 
moneys  or  property  in  trust  or  on  deposit  from  courts  of  law  or  e<juitv,  includ- 
ing courts  of  probate  and  insolvency,  executors,  administrators,  assipne«"-s,  guard- 
ians, trustees,  corporations  or  individuals,  upon  such  tenns  or  conditions  as  mav 
be  obtained  or  agreed  upon. 

Section-  4.  Any  court  of  law  or  of  equity,  including  courts  of  probate  and 
insolvency  of  this  State,  may,  by  decree  or  otherwise,  direct  any  nionry:.  or 
property  under  its  control,  or  that  may  be  paid  into  court  by  th«'  ]mrties  to  any 
legal  proceedings,  or  which  may  be  brought  by  reason  of  any  order  or  judprnent 
in  equity  or  otherwise,  to  be  deposited  with  said  corporation  upon  such  terms 
and  subject  to  such  instructions  as  may  be  deemed  expetlient  bv  said  court; 
provided,  hoireter,  that  said  corporation  shall  not  be  required  to  assume  or  exe- 
cute any  trust  without  its  own  assent. 

INVEST.MENTS. 

StcTioN  5.  It  shall  be  lawful  for  said  corporation  to  iii\«-i  its  c.ipit.il  and 
all  the  moneys  intrusted  to  it,  or  in  any  way  received  by  it,  in  the  autlmri/cd 
loans  of  the  United  States,  or  of  any  of  the  New  England  States,  or  citii  s  or 
towns  of  this  Commonwealth;  in  the  stock  of  national  banks  organiie<l  within 
this  Commonwealth;  in  the  first  mortgage  bonds  of  any  railroad  company  which 
has  earned  and  paid  regular  dividends  for  two  years  next  precwling  such  invest- 
ment, or  in  the  bonds  of  any  such  railroad  company  as  is  unincumU'red  by 
mortgage,  or  in  the  stock  of  such  railroad  companies  incorporated  by  this  State; 
and  the  said  corporation  may  make  loans  upon  mortgages  on  real  estate  within 
this  Connnonwealth.  or  upon  the  notes  of  corporations  create  1  under  the  laws 
of  this  Commonwealth,  and  the  notes  of  individuals,  with  a  sufficient  j>le«lge  as 
collateral,  of  any  of  the  aforesaid  securities;  but  all  real  estate  acquired  by  fore- 
closure of  mortgages,  or  by  levy  of  execution,  shall  be  sold  at  public  auction 
within  two  years  of  such  foreclosure  or  levy. 

Amended  Charter — Section  ;?.  It  shall  be  lawful  for  the  said  corporation  to 
invest  its  capital,  and  all  moneys  held  by  it  in  trust,  in  the  authorizeil  loans  of 
any  of  the  counties,  cities,  or  towns  in  any  of  the  New  England  .'states,  or 
to  loan  the  same  to  this  Commonwealth,  or  to  any  county,  city  or  town  therein : 
and  said  corporation  may  also  invest  such  capital  and  moneys  in  any  other 
securities  in  which  savings  banks  now  are  or  hereafter  may  Ik*  allowcil  to  invest, 
and  shall  be  subject  to  and  governed  by  the  provisions  concerning  savings  banks 
which  are  contained  in  sections  one  hundred  and  forty-three  and  one  hundred 
and  forty-six  of  chapter  57  of  the  General  Statutes.' 


•  General   Statutes.   Chapter  57. 

Section  143.  "No  such  corporation  .shall  hold,  both  by  way  of  Investment 
and  as  security  for  loans,  more  than  one-half  the  capital  stock  of  any  bank,  nor 
have    more    than    seventy-five   per   cent,   of  its   deposits   Invested   In   mortgages  of 


70  TRUST    COMPANIES. 

BANKING-HOUSE. 

Section  6.  Said  corporation  may  hold  real  estate  in  the  City  of  Boston, 
suitable  for  the  transaction  of  its  business,  to  an  amount  not  exceeding  two 
hundred  thousand  dollars. 

EXAMINATION   BY   SAVINGS   BANK*  COMMISSIONER. 

Section  7.  The  said  corporation  shall  semi-annually  make  a  return  to  the 
Commissioner  of  Savings  Banks  of  this  Commonwealth,  on  or  before  the  sec- 
ond Mondays  of  May  or  November,  which  shall  be  signed  and  sworn  to  by  a 
majority  of  its  board  of  directors,  stating  the  full  amount  of  its  capital  stock 
and  of  all  moneys  and  property,  in  detail,  in  the  possession  or  charge  of  said 
company,  as  deposits,  trust  funds,  or  for  purposes  of  investment;  and  the  Com- 
missioner of  Savings  Banks  shall  have  the  same  access  to  the  vaults,  books,  and 
papers  of  this  corporation,  and  it  shall  be  his  duty  to  inspect,  examine  and  inquire 
into  its  affairs,  and  to  take  proceedings  in  regard  to  them  in  the  same  manner 
and  to  the  same  extent  as  if  this  corporation  were  a  savings  bank,  subject  to  all 
the  general  laws  which  now  are  or  hereafter  may  be  in  force  in  relation  to  such 
institutions  in  this  regard. 

TAXES. 

Section  8.  Repealed  by  the  amended  charter,  and  the  following  substituted: 
Section  8.  Said  corporation  shall  be  subject  to  the  provisions  of  chapter 
two  hundred  and  eighty-three  of  the  acts  of  the  year  eighteen  hundred  and  sixty- 
five,  and  any  acts  now  existing,  or  which  may  hereafter  be  passed  in  amendment 
or  lieu  thereof;  it  shall  also,  annually,  between  the  first  and  tenth  days  of  May, 
return  to  the  tax  commissioner  a  true  statement,  attested  by  the  oath  of  some 
oflScer  of  the  corporation,  of  all  personal  property  held  upon  any  trust  on  the 
first  day  of  May,  which  would  be  taxable  if  held  by  an  individual  trustee  residing 
in  this  Commonwealth,  and  the  name  of  every  city  or  town  in  this  Commonwealth 
where  any  beneficiary  resided  on  said  day,  and  the  aggregate  amount  of  such 
property  then  held  for  all  beneficiaries  resident  in  each  of  such  cities  and  towns, 
and  also  the  aggregate  amount  held  for  beneficiaries  not  resident  in  this  Com- 
monwealth, under  the  pains  and  penalties  provided  in  section  fourteen  of  chapter 
two  hundred  and  eighty-three  of  the  acts  of  the  year  eighteen  hundred  and  sixty- 
five,  and  acts  in  amendment  thereof,  for  corporations  failing  to  make  the  returns 
provided  by  said  act.  Said  corporation  shall  annually  pay  to  the  Treasurer  of 
the  Commonwealth  a  sum  to  be  ascertained  by  assessment  upon  an  amount  equal  to 
the  total  value  of  such  property  at  a  rate  to  be  ascertained  and  determined  by 
the  tax  commissioner,  under  section  five  of  chapter  two  hundred  and  eighty-three 
of  the  acts  of  the  year  eighteen  hundred  and  sixty-five  and  acts  in  amendment 
thereof. 

No  taxes  shall  be  assessed  in  any  city  or  town  for  state,  county,  or  town 
purposes,  upon  or  in  respect  of  any  property  held  in  trust  as  aforesaid;  but 
such  proportion  of  the  sum  so  paid  by  said  corporation,  as  corresponds  to  the 
amount  of  such  property  held  for  beneficiaries  resident  in  this  Commonwealth, 
shall  be  credited  and  paid  to  the  several  cities  and  towns  where  it  appears,  from 
the  returns,  or  other  evidence,  that  such  beneficiaries  resided  on  the  first  day 
of  May  next  preceding,  according  to  the  aggregate  amount  so  held  in  trust  for 
beneficiaries  residing  in  such  cities  and  towns  respectively;  and,  in  regard  to  such 
tax  so  to  be  assessed  and  paid  as  aforesaid,  said  corporation  shall  be  subject  to 
sections  eleven,  twelve,  thirteen,  the  last  paragraph  of  section  fifteen,  and  sec- 
tion seventeen,  of  chapter  two  hundred  and  eighty-three  of  the  acts  of  the  year 
eighteen  hundred  and  sixty-five  and  acts  in  amendment  or  lieu  thereof,  so  far 
as  the  same  are  applicable  thereto. 


real   estate,   nor  invest  more  than   ten   per  cent,    thereof,   and  not   to   exceed   one 
hundred  thousand  dollars,   in  the  capital  stock    of    any   corporation." 

Section  146.  "No  member  of  a  committee  or  officer  of  such  corporation 
charged  with  the  duty  of  investing  its  funds,  shall  borrow  or  use  any  portion 
thereof,  be  surety  for  loans  to  others,  or  in  any  manner,  directly  or  indirectly, 
be  an  obligor  for  money   borrowed  of  or  loaned  by  the  corporation." 


or 

ORGANIZATION    OF    TRUST;    COMI'AMK-  :i 

FIXAXCIAL  AGENCIES. 
Sectiok  9.  The  said  corporation  is  also  authorized  to  act  as  agtnt  for  the 
purpose  of  issuing,  repjistering,  or  countersigning  the  certificates  of  stock,  bond^, 
or  other  evidences  of  indebtedness  of  any  corporation,  association,  municipality, 
state  or  public  authority,  and  to  receive  and  make  payments  on  account  of  the 
same,  on  such  terms  as  may  be  agreed  upon. 

CH.VRTEH    PERPETL'AL. 

Section-  10.  This  act  shall  take  effect  upon  its  passage,  and  shall  continue 
in  force  fifty  years,  unless  sooner  modified  or  terminated  by  the  legislature. 

Amended  as  folloics—Sertion  4.  Section  eight,  and  .so  much  of  section  ten, 
of  chapter  one  hundred  and  eighty-two  of  the  acts  o(  the  year  eighteen  hundred 
and  sixty-nine,  as  limits  the  existence  of  said  corporation  to  fifty  years,  is  hereby 
repealed. 

Amended  Charter—Section  r>.  This  act  shall  take  effect  whenever  it  shall 
be  accepted  by  a  vote  of  said  corporation,  at  a  meeting  warned  for  the  jiurfKise. 

Within  thirty  days  after  such  acceptance,  a  copy  of  the  vote  accepting  the 
same,  certified  l)y  and  attested  by  the  oath  of  IIr-  President,  or  one  of  the  Vice- 
Presidents  of  the  corporation,  and  the  Secretarj-  thereof,  slmll  Im*  ftleti  in  the 
office  of  the  Secretary  of  State,  and  such  certificate  shall  be  conclusive  evidence 
of  such  acceptance. 

The  amended  charter  was  duly  accepted  April  IJ.  1S71.  and  the  proper 
certificate  filed. 

AN'   ACT 

To  AMEXD  THE    CHARTER  OF  THE    N'eW    EkGI.AND  ThIST  CoMPAXY. 

Be    it   enacted   by   the   Senate   ami   House  of   Representatires,   in    General   Court 
assembled,  and  by  the  authority  of  the  same,  as  folloirs: 

Secti(<n'  9.  The  New  England  Trust  Company  may  l>e  a|)p<)inte<l  trustee 
under  any  will  or  instrument  creating  a  trust,  for  the  care  and  management  of 
property,  under  the  same  circumstances,  in  the  same  manner,  and  subject  to 
the  same  control  by  the  court  having  jurisdiction  of  the  same,  as  in  the  case  of  a 
legally-qualified  person.  The  capital  stock  of  said  corjmration,  with  the  liabili- 
ties of  the  stockholders  existing  thereunder,  shall  be  held  as  security  for  the 
faithful  discharge  of  the  duties  undertaken  by  virtue  of  this  act,  and  no  surety 
shall  be  required  ujion  the  l)(»nds  filed  l)y  said  corporation.  In  all  pn>ceedings 
in  the  probate  court  or  elsewhere,  connected  with  any  authority  exercised  under 
this  act,  all  accounts,  returns,  and  other  papers  may  be  signed  and  sworn  to  In 
behalf  of  the  corjioration.  by  any  officer  thereof  duly  authorised  by  it;  and  the 
answers  and  examinations,  imder  oath  of  such  officer,  shall  be  receive<l  as  the 
answers  and  examinations  of  the  cori>oration,  and  the  court  may  onler  and 
compel  any  and  all  officers  of  said  corporation  to  answer  and  attend  .<nid 
examinations  in  the  same  manner  as  if  they  were  jiarties  to  the  pnH-«f<lings  or 
inquiry  instead  of  the  corjioration;  provided,  hotrerfr.  that  said  corporation  shall 
not  be  retpiired  to  receive  or  holil  any  property  or  moneys  or  to  execute  any 
trust  contrary-   to   its   own   ilesire. 

Section-  3.  In  the  management  of  money  and  property  held  by  it  as  trustee 
under  the  powers  conferred  in  the  foreg<iing  section,  said  corporation  shall  in- 
vest the  same  in  the  general  trust  fund  of  the  company;  pntrided.  that  it  shall 
be  coinj)etent  for  the  autiiority  making  the  appointment  t"»  direct,  upon  con- 
ferring the  same,  whether  sucii  money  and  property  shall  be  held  sep.initely  or 
invested  in  the  general  trust  fund  of  the  company;  and  provided,  also,  that  said 
corporation  shall  always  be  l>ound'  to  follow,  and  be  entirely  governed  by  all 
directions  contained  in  any  will  or  instrument  under  which  it  may  act. 

Section  IJ.  No  money,  property,  or  securities  received  or  held  by  said 
company  under  the  pro\  isions  of  this  act  shall  be  mingUni  with  the  investments 
of  the  capital  stock  or  other  moneys  or  property  belonging  to  said  corporation, 
or  be  liable  for  the  debts  or  obligations  thereof. 


72  TRUST    COMPANIES. 

Section  4.  The  returns  of  said  corporation  required  to  be  made  to  the 
Commissioners  of  Savings  Banks  shall  be  in  the  form  of  a  trial  balance  of  its 
books,  and  shall  specify  the  different  kinds  of  liabilities,  and  the  different  kinds 
of  its  assets,  stating  the  amount  of  each  kind,  in  accordance  with  a  blank  form 
to  be  furnished  by  said  commissioners.  And  these  returns  shall  be  published 
in  a  newspaper  of  the  City  of  Boston,  at  the  expense  of  said  corporation,  and 
in  the  annual  report  of  said  commissioners. 

(Sectiox  5.  This  act  shall  take  effect  upon  its  acceptance  by  said  cor- 
poration, which  acceptance,  with  the  date  thereof,  shall  within  ten  days  there- 
after be  certified  by  the  President  of  the  corporation  to  the  Secretary  of  the 
Commonwealth. 

Approved  3Iay  16,  1877. 

[Accepted  by  the  corporation  at  special  meeting,  June  1,  1877.] 


AN   ACT 

To  ALLOW  THE    NeW   EnGLAXD   TrUST   CoMPAXY   TO   3IAKE    ADDITIONAL    INVESTMENTS. 

Be  it  enacted,  etc.,  as  follows: 

Section  1.  The  New  England  Trust  Company,  incorporated  under  chapter 
one  hundred  and  eighty-two  of  the  acts  of  the  year  eighteen  hundred  and  sixty- 
nine,  may,  in  addition  to  the  investments  which  it  is  authorized  to  make,  invest 
the  moneys  intrusted  to  it,  or  in  any  way  received  by  it,  in  the  notes  of  manu- 
facturing corporations  created  by  the  laws  of  any  of  the  New  England  States, 
the  property  of  which  is  unincumbered  by  mortgage,  and  which  have  paid  a  div- 
idend for  the  two  years  next  preceding  such  investment;  also  to  take  as  collateral 
upon  the  notes  of  individuals,  citizens  of  this  state,  for  a  period  not  exceed- 
ing four  months,  the  bonds  of  cities  in  the  United  States  containing  at  least 
one  hundred  thousand  inhabitants,  whose  net  indebtedness  does  not  exceed  five 
per  cent,  of  the  valuation  of  the  taxable  property  therein,  to  be  ascertained  by 
the  last  preceding  city  valuation  for  the  assessment  of  taxes,  and  selling  in  the 
market  above  par;  provided,  that  said  bonds  shall  be  taken  at  not  over  eighty 
per  cent,  of  the  market  value  thereof. 

Section  2.  This  act  shall  take  effect  upon  its  acceptance  by  the  New 
England  Trust  Company.  Approved  March  16,  1882. 

[Accepted  April   10,  1882.] 

Where  general  laws  regulating  the  trust  company  business  are  in 
force,  the  special  act,  as  stated  above,  may  not  recite  the  powers  and 
limitations  of  the  company  in  detail,  but  mereh'  refer  to  the  general  law 
covering  the  case.    The  following  is  an  illustration  of  such  a  special  act: 

CHARTER  OF  THE  FEDERAL  TRUST  COMPANY. 

COMMONWEALTH  OF  MASSACHUSETTS. 

In  THE  Year  One  Thousand  Eight  Hundred  and  Ninety-Nine. 

AN  ACT 

To   Incorporate  the   Federal   Trust  Company. 

(Chapter  93,  Acts  of  1899.) 

Be  it   enacted   by   the   Senate   and   House   of  Representatives   in   General   Court 
assembled,  and  by  the  authority  of  the  same,  as  follows: 

Section  1.  James  W.  Kenney,  Thomas  B.  Fitzpatrick,  Josiah  S.  Dean,  James 
M.  Morrison,  Charles  J.  Connelly,  John  W.  Home,  William  J.  Emerson,  Thomas 
L.  Jenks,  Joseph  B.  Horton,  Jeremiah  C.  Spillane,  John  J.  Johnston,  William 


ORGANIZATION    OF    TRUST    COMPANIES.  7:^ 

J.  Carlin,  Pierce  Powers,  John  E.  Stanton,  John  B.  Fitzpatrick,  Lawrence  J. 
Logan,  Thomas  F.  Galvin  and  Joseph  H.  O'Neil,  their  associates  and  successors, 
are  hereby  made  a  corporation  under  the  name  of  the  Federal  Trust  Company. 

Section  2.  Said  corporation  shall  have  authority  to  establish  and  maintain 
a  safe  deposit  and  trust  company  in  the  City  of  Boston,  with  all  the  powers 
and  priviiefjes  and  subject  to  all  the  rijrhts,  duties,  liabilities,  and  restrictions  set 
forth  in  all  general  laws  which  now  are  or  hereafter  may  b«-  in  forcr  rt-latlng 
to  such  corporations. 

Sectiox  3.     This  act  shall  take  effect  upon  its  passage. 

House  of  Representatives,  February  /;,  /v'-f'. 

JoHX  L.  Battb,  Speaker. 

In  those  States  and  Territories  whose  laws  make  no  special  provisions 
for  tl)c  incorporation  of  trust  companies,  and  where  the  system  of  special 
acts  granting  cliarters  docs  not  prevail,  such  corporations  are  organized 
under  the  general  incorporation  laws  or  under  the  banking  laws.  The 
forms  for  such  incorporation  vary  somewhat  in  the  several  States,  but  the 
incorporation  certificate,  which  is  forwarded  to  the  Secretary  of  State, 
usually  specifics  the  names  of  the  corporators,  the  name  of  the  proposed 
corporation,  its  location,  its  puri)osc,  and  powers  desired,  the  amount  of 
its  capital  and  number  of  shares  into  which  it  is  divided,  and  the  date  of 
the  instrument.  The  Secretary  of  State  examines  the  certificate  to  make 
sure  that  it  contains  nothing  inconsistent  with  the  laws  of  the  State,  and 
if  he  finds  that  it  is  all  right  in  this  respect,  issues  his  certificate  that  the 
articles  of  incorporation  have  been  filed,  and  that  the  company  has  au- 
thority to  do  business. 


CHAPTER  IV. 
TRUST   COMPANY  LEGISLATION. 

DURING  the  past  few  years  there  has  been  an  increasing  activity 
among  the  State  and  Territorial  lawmakers  in  the  passage  of  laws 
relating  to  trust  companies.  At  the  meeting  of  the  Trust  Com- 
pany Section  of  The  American  Bankers'  Association,  in  1897,  it  was 
stated  that  only  nineteen  of  the  States  had  general  trust  company  laws.* 

In  19O8,  all  but  three  of  the  States  and  Territories  had  some  sort  of 
general  legislation  regarding  trust  (Companies,  though  in  several  in- 
stances such  legislation  is  very  incomplete.  In  twenty-nine  States  and 
Territories,  trust  companies  are  incorporated  under  and  governed  by 
general  trust  company  laws ;  in  eleven  others,  trust  companies  are  or- 
ganized under  the  general  incorporation  laws,  but  are  governed  by  gen- 
eral trust  company  laws.  In  seven  States,  trust  companies  are  incor- 
porated by  special  acts  of  the  Legislatures. 

Florida,  Nebraska  and  Nevada  give  no  recognition  to  trust  companies 
in  their  legislation.  All  three  have  trust  companies  in  operation,  how- 
ever, the  number  of  such  corporations  reported  in  June,  IPOS,  being  as 
follows:  Florida,  8;  Nebraska,  9;  Nevada,  5.  In  these  States  no  dis- 
tinction is  made  between  trust  companies  and  other  corporations,  and 
they  are  formed  under  the  general  incorporation  laws,  or  if  they  do  a 
banking  business,  under  the  banking  laws. 

In  seven  States,  namely,  Connecticut,  Delaware,  Maryland,  New 
Hampshire,  South  Carolina,  Vermont  and  Virginia,  trust  com- 
ipanies  are  incorporated  by  special  acts  of  the  Legislatures.  These 
States  have  some  general  statutes  relating  to  trust  companies,  placing 
them  under  the  control  of  the  State  authorities,  authorizing  them 
to  execute  certain  kinds  of  trusts  and  fixing  methods  of  taxation; 
but  in  Virginia  there  is  only  a  little  of  such  legislation.  In  North  Caro- 
lina trust  companies  were  incorporated  only  by  special  acts  until  late  in 
the  year  1907,  and  in  Rhode  Island  until  1908,  since  which  time  they  may 
be  incorporated  under  the  general  trust  company  law.  Alabama,  Maine 
and  Massachusetts  have  only  in  recent  years  given  up  the  incorporation 
by  special  acts  for  that  by  general  statutes.  Maryland  formerly  had  a 
general  law  for  the  incorporation  of  trust  companies,  but  this  was  re- 
pealed in  1890.  The  preamble  of  the  act  of  repeal  sets  forth  that  be- 
cause of  the  changes  in  the  character  of  trust  companies  since  1876 
(when  the  general  law  was  passed),  and  on  account  of  the  incomplete- 
ness of  the  general  law,  it  had  been  necessary  to  incorporate  trust  com- 
panies by  special  acts  anyway,  and  that  the  latter  method  of  incorpora- 
tion is  a  proper  one. 


»  Proceedings  Trust   Company   Section,   1897,    p.    15S. 


TRL'ST    COMPANY    LEGISLATION.  75 

In  Iowa,  trust  companies  are  organized  under  the  general  laws  with 
trust  powers  only,  or  under  the  banking  law  if  they  are  to  undertake  the 
bankinir  business.  Paragraph  1889  of  the  Code  of  189.5  gives  trust  com- 
panies limited  Savings  Bank  powers,  except  companies  organized  prior  to 
1886,  which  seem  to  be  authorized  to  do  both  banking  and  trust  business. 
The  laws  of  the  State  relating  specifically  to  trust  companies  are  very 
meagre. 

The  following  thirty-nine  States  and  Territories  have  more  or  less 
complete  general  trust  company  laws:  Alabama,  .\rizona,  .\rkansas, 
California.  Colorado,  District  of  Columbia.  Cieorgia.  Hawaii.  Idaho, 
Illinois,  Indiana,  Kansas,  Kentucky.  Louisiana.  Maine.  Massachusetts. 
Michigan.  Minnesota,  Mississippi,  Missouri,  Montana,  New  Jersey,  New 
Mexico,  New  York.  North  Carolina,  North  Dakota,  Ohio,  Oklahoma, 
•Oregon,  Pennsylvania,  Rhode  Island,  South  Dakota.  Tennessee,  Texas, 
Utah,  Washington,  ^^'est  Virginia.  Wisconsin,  Wyoming. 

Of  the  States  and  Territories  in  which  trust  companies  are  governed 
by  general  trust  company  laws,  about  two-thirds  provide  specially  for 
their  incorporation,  while  in  the  other  third  the  organization  is  con- 
ducted under  the  general  incorporation  laws.  The  minimum  number  oi' 
corporators  required  varies  from  S  to  2.1^  the  latter  number  being  required 
in  the  District  of  Columbia,  and  the  former  in  nine  ditlerent  States. 
Five  is  a  favorite  number,  ten  States  fixing  it  as  the  niinimum.  The 
number  required  in  New  York  is   13. 


'  NfMUER  OF  Director?  Reqi'irf.d. 

Many  of  the  States  stipulate  the  minimum  number  of  directors  that  a 
trust  company  may  have,  a  few  also  stipulating  the  maxinunn  number. 
In  Colorado  and  Washington,  the  number  required  is  at  least  .S ;  in  Mon- 
tana, from  3  to  -25;  in  Idaho,  Maine,  New  Jersey.  New  Mexico,  South 
Dakota,  Tennessee  and  Wisconsin,  at  least  .'5;  in  Georgia  and  Kansas, 
from  5  to  15;  in  Missouri,  Oklahoma  and  Texas,  from  5  to  "25;  in  In- 
diana, at  least  6;  in  Michigan,  at  least  7;  in  North  Dakota,  from  9  to 
IT);  in  ^linnesota,  from  9  to  27;  in  the  District  of  Columbia,  from  9  to 
SO;  and  in   New  York,  from    l.S  to  30. 


The  Amoi-nt  qk  C'apital  Stock. 

The  amount  of  capital  stork  which  trust  companies  are  required  to 
have  varies  considerably  in  the  ditierent  States  and  Territories,  and  is 
naturally  smallest  in  States  where  the  towns  are  apt  to  hv  small. — though 
this  is  by  no  means  an  invariable  rule.  In  alx>ut  half  of  the  States 
having  legislation  on  the  subject,  a  definite  minimum  amount  of  capital 
is  fixed  without  regard  to  the  size  o(  the  town  or  city  in  which  the  com- 
pany is  loc.-'.ted.     The  other  States  arrange  schedules  in  which  the  mini- 


76  TRUST    COMPANIES. 

mam  capital  required  is  determined  by  the  size  of  the  place  in  which  the 
company  is  situated.* 

Thus,  South  Carolina  fixes  the  minimum  capital  with  which  trust 
companies  may  be  formed  anywhere  in  the  State  at  $25,000;  Texas, 
$50,000;  Hawaii,  $100,000,  half  paid;  California,  Georgia,  Kansas,. 
Louisiana,  Mississippi,  Missouri,  JNIontana,  New  Jersey,  New  Mexico, 
North  Dakota,  Tennessee  and  West  Virginia,  $100,000;  Ohio,  $100,- 
000  or  $125,000,  according  to  business  done;  Pennsylvania,  $125,000;. 
Minnesota,  $200,000,  and  the  District  of  Columbia,  $1,000,000.  The 
following  States  have  schedules  in  which  the  minimum  capital  re- 
quirements range  between  the  figures  shown;  Alabama,  from  $25,000 
to  $100,000;  Arkansas,  $50,000  to  $100,000;  Colorado,  $50,000  to  $250,- 
000;  Idaho,  $10,000  to  $100,000;  Indiana,  $25,000  to  $100,000;  Iowa, 
$10,000  to  $50,000;  Kentucky,  $15,000  to  $200,000;  Maine,  $25,000  to 
$150,000;  Massachusetts,  $100,000  to  $200,000;  Michigan,  $150,000  to 
$300,000;  New  York,  $100,000  to  $500,000;  North  Carolina,  $5,000  to 
$25,000;  Oklahoma,  $100,000  to  $200,000;  Oregon,  $10,000  to  $50,- 
000;  South  Dakota,  $25,000  to  $100,000;  Utah,  $25,000  to  $100,000;. 
Washington,  $10,000  to  $100,000;  Wisconsin,  $50,000  to  $100,000; 
Wyoming,  $10,000  to  $100,000.  It  thus  appears  that  the  smallest  mini- 
mum capital  required  is  in  North  Carolina,  where,  in  towns  of  1500' 
or  less  population,  companies  may  be  formed  with  a  capital  of  $5,000; 
while  the  largest  minimum  is  that  of  the  District  of  Columbia,  $1,000,- 
000.  It  should  be  added  that  the  minima  above  given  usually  apply 
only  to  companies  which  actually  undertake  a  trust  business;  the  mini- 
mum often  being  smaller  if  the  comjjany  does  only  a  banking  business. 

Most  of  the  States  do  not  place  any  maximum  limit  to  the  capital  al- 
lowed, but  a  few  do.  The  maximum  limit  is  $1,000,000  in  Kansas;  $2,- 
000,000  in  Georgia,  Indiana,  Minnesota,  and  Pennsylvania;  $5,000,000 
in  West  Virginia,  and  $10,000,000  in  Missouri,  Montana  and  Texas. 

Powers  and  Capacities  of  Trust  Companies. 

The  powers,  or  capacities  in  which  trust  companies  may  act,  are 
much  the  same  in  different  States  and  Territories  having  general  trust 
company  laws,  save  in  the  extent  to  which  a  regular  banking  business- 
may  be  conducted.  Such  companies  possess,  of  course,  the  powers 
generally  granted  to  all  corporations.  The  special  powers  are  usually 
enumerated  in  detail;  and  in  those  cases  where  they  are  not  so  enumer- 
ated there  is  usually  a  provision  authorizing  them  to  undertake  "any 
lawful  trusts"  and  to  conduct  all  "such  business  as  is  usually  carried  on 
by  such  companies." 

There  is  evidence  that  the  trust  company  laws  of  the  State  of  New 
York  have  been  taken  as  a  guide  in  the  construction  of  trust  company 
laAvs  in  many  of  the  other  States.    This  resulted,  no  doubt,  both  from  the 


*  Details    of    these    schedules,    as   well   as  of  other  matters  htre  mentioned,  are 
given  in  Chapter  V.  • 


TRUST    COMPANY    LEGISLATION.  77 

fact  that  New  York  has  long  htLU  tht-  financial  centre  of  tlie  country, 
and  iHcause  it  was  early  in  the  field  witii  a  general  trust  company  law, 
such  a  law  having  been  passed  in  1887.  The  fact  that  New  York's  laws 
have  for  many  years  served  as  guides  in  many  lim  s  of  legislation  other 
than  financial  must  also  have  had  its  influence. 

It  will  be  useful  to  know  in  detail  the  j)rovisions  of  the  New  York 
laws  regarding  the  powers  of  trust  companies,  and  the  sections  of  the 
statutes  giving   these   powers  are  therttitrc   priseiilcd   in   full: 

POWERS  OF  TRUST  COMPANIKS  IN  NEW  YORK. 
(As  amended  by  CliajHer  IIU.  Acts  of  190S.I 
Section  IjC.  Powers  of  Corporation.  Upon  tin-  filinji  of  any  siuli  «-«-rtift- 
cate  of  authorization  of  a  trust  company,  tin-  pirsons  named  tlu-reiri  and  thdr 
successors  shall  thereni)on  and  thereby  heeonie  a  corporation,  tind  in  addition 
to  the  i)0\vers  conferred  hy  the  general  corporation  hiw  and  tti«-  >t<K-k  eorporatioi. 
law,  siiall  have  power: 

I.  To  act  as  tlie  fiseal  or  transfer  a<rent  of  any  state.  rnnni<ipality.  IkmIv 
l>olilie  or  corporation;  and  in  Mich  capacity  to  n-ceivc  and  disltiirse  money, 
to  transfer,  refjister  and  conntcrsifrn  certificates  of  st«»ek,  hon»ls  or  other  evi- 
dences of  indebtedness,  and  to  act  as  aj;ent  of  any  cor|>oration,  foreijfU  or 
domestic,    for  any    lawful   pnr])osc. 

~.  To  receive  deposits  of  trust  moneys,  securities  an(i  other  persona!  prop- 
erty from  any  person  or  cor])oration.  and  to  loan  niotuy  on  real  or  |>ersonal 
securities. 

3.  To  lease,  hold,  purchase  and  convey  any  and  all  real  projx'rty  necessarr 
in  the  transaction  of  its  business,  or  which  tlu-  purposes  of  the  corporation  may 
require,  or  which  it  shall  acquire  in  satisfaction  or  partial  sati>faction  of  debts 
dui-  the  corporation  under  sale.;,  judpmeiils  or  mortjrajies,  »ir  in  settlement 
or  partial  settlement  of  debts  due  the  corporation  by  any  of  its  debtors. 

4.  To  act  as  trustee  imder  any  mortpajre  or  bonds  issued  by  any  municipal- 
ity, body  ]>olitic  or  corporation,  and  accept  and  execute  any  <»tl»er  municipal 
or  corporate  trust  not   inconsistent   with  the  laws  of  this  state. 

5.  To  aece])t  trusts  from  and  execut<'  trusts  for  married  women,  in  respect 
to  their  separate  ])roin'rty,  and  to  be  their  afient  in  the  manapement  of  such 
property,  or  to  transact  any  business  in  relation  thereto. 

6.  To  act  under  the  order  or  appointment  of  any  court  of  record  as 
guardian,  receiver  or  trustee  of  the  estate  of  any  minor,  and  as  depositary  of 
any  moneys  i>aid  into  court,  whether  for  the  benefit  of  any  such  minor  or  other 
person,  corporation  or  party. 

7.  To  take,  accept  and  «-xecute  any  and  all  such  legal  trusts,  duties  and 
powers  in  regard  to  the  holding,  management  and  disposition  of  any  estate,  real 
or  personal,  and  the  rents  and  profits  thereof,  or  the  sale  tln-reof.  as  may  l>e 
granted  or  i-onfided  to  it  by  any  court  of  record,  or  by  any  jH^rson.  corporation, 
municijiality,  or  other  authority;  and  it  shall  l»e  accountable  to  nil  parties  in 
interest  for"  the  faithful  discharge  of  every  such  trust,  duty  or  power  which  it 
may  so  aeeej»t. 

8.  To  take,  accei>t  and  execute  any  and  all  trusts  and  powers  of  whatso- 
ever nature  or  descriptiim  as  may  be  conferred  upon  or  intrust(>d  or  conunitted 
to  it  bv  any  person  or  persons,  or  any  body  jxilitie.  eor]>oration  or  oIImt  atithor- 
ity.  by  grant,  assigmnent.  transfer,  devise.  be<piest  or  otherwise,  or  which  may 
be  intrusted  or  committed  or  transferred  to  it  or  vested  in  it  by  order  of  any 
court  of  record,  or  anv  surrogate,  and  to  ret-eive  and  take  and  hold  any  prop- 
erty or  estate,  real  or  personal,  which  may  be  the  subject  of  any  such  trust. 

9.  To  purchase,  invest  in  and  sell  stocks.  i>ills  of  exchange,  bonds  and 
mortgages  and  other  securities;  and  when  mc»neys  or  securities  for  moneys  are 
borrowed  or  received  on  deposit,  or  for  investment,  the  i>onds  or  oliligations  of 
the  company  may  be  given  therefor,  but  it  shall  have  no  right  to  issue  bills 
to  circulate  as   monev. 


78  TRUST    COMPANIES. 

10.  To  be  appointed  and  to  accept  the  appointment  of  executor  of  or 
trustee  under  the  last  will  and  testament,  or  administrator  with  or  without  the  will! 
annexed,  of  the  estate  of  any  deceased  person,  and  to  be  appointed  and  to  act 
as  the  committee  of  the  estates  of  lunatics,  idiots,  persons  of  unsound  mind  and 
habitual   drunkards. 

11.  To  exercise  the  powers  and  possess  the  privileges  conferred  on  banks 
and  individual  bankers  by  sections  fifty-five  and  fifty-six  of  this  chapter,  subject  to 
the  restrictions  contained  in  said  sections.  No  such  corporation  shall  have  any 
right  or  power  to  make  any  contract,  or  to  accept  or  to  execute  any  trust  what- 
ever, which  it  would  not  be  lawful  for  any  individual  to  make,  accept  or  execute- 
No  loan  exceeding  in  amount  one-tenth  of  its  capital  stock  shall  be  made  by  any 
such  corporation  (directly  or  indirectly),  to  any  director  or  officer  thereof,  and  no 
loan  to  such  director  or  officer  shall  be  made  without  the  consent  of  a 
majority  of  the  directors.  No  such  corporation  shall  transact  its  ordinary  busi- 
ness by  branch  office  in  any  city  not  named  in  its  certificate  of  incorporation  or 
charter  as  the  place  where  its  business  is  to  be  transacted.  No  trust  company 
shall  open  a  branch  office  without  first  having  obtained  the  written  approval  of  the 
superintendent  of  banks  to  the  opening  of  such  branch  office,  which  written  approval 
may  be  given  or  withheld  in  his  discretion,  and  shall  not  be  given  by  him  until 
he  has  ascertained  to  Ms  satisfaction  that  the  public  convenience  and  advantage 
will  be  promoted  by  the  opening  of  such  branch  office;  and,  provided  further, 
that  no  trust  company  in  this  state,  or  any  officer  or  director  thereof,  shall  open 
or  maintain  a  branch  office,  unless  the  capital  of  such  trust  company  actually 
paid  in  cash  shall  exceed  the  amount  required  by  the  law  under  which  it  was 
incorporated  by  the  sum  of  one  hundred  thousand  dollars  for  each  branch  office 
so  opened  or  maintained.  Every  trust  company  and  every  such  officer  or  director 
opening  a  branch  office  without  such  written  approval  shall  forfeit  to  the  people 
of  the  state  the  sum  of  one  thousand  dollars  for  every  week  during  which  any 
branch  office  shall  be  maintained  without  such  written  approval.  No  foreign  corpora- 
tion shall  have  or  exercise  in  this  state  the  power  to  receive  deposits  of  trust 
moneys,  securities  and  other  personal  property  from  any  person  or  corporation, 
or  any  of  the  powers  specified  in  sub-divisions  one,  four,  five,  six,  seven,  eight, 
ten  and  eleven  of  this  section,  nor  have  or  maintain  an  office  in  this  state  for  the 
transaction  of,  or  transact  directly  or  indirectly,  any  such  or  similar  business. 

Section  157.  When  any  such  corporation  is  appointed  executor  in  any  last 
will  or  testament,  the  '-ourt  or  officer  authorized  to  grant  letters  testamentary 
in  this  state  shall,  upon  the  proper  application,  grant  letters  testamentary  thereon 
to  such  corporation.  When  application  is  made  to  any  court  or  officer  having 
authority  to  grant  letters  of  administration  with  the  will  annexed  upon  the  estate 
of  any  deceased  person,  and  there  is  no  person  entitled  to  such  letters  who  is 
qualified,  competent,  willing  and  able  to  accept  such  administration,  such  court 
or  officer  may,  at  the  request  of  any  party  interested  in  the  estate,  grant  such 
letters  of  administration  with  the  will  annexed,  to  any  such  corporation.  Any 
court  or  officer  having  authority  to  grant  letters  of  guardianship  of  any  infant, 
may,  upon  the  same  application  as  is  required  by  law  for  the  appointment  of  a 
gr.ardian  of  such  infant,  appoint  any  such  corporation  as  guardian  of  the  estate 
of  sucl:  infant.  .\ny  court  having  jurisdiction  to  appoint  a  trustee,  guardian, 
receiver  or  committee  of  the  estate  of  a  lunatic,  idiot,  or  habitual  drunkard,  or 
to  make  any  fiduciary  appointment,  may  appoint  any  such  corporation  to  be  such' 
trustee,  guardian,  recei\er  or  committee,  or  to  act  in  any  other  fiduciary  capacity. 
All  moneys  brought  into  court  by  order  or  judgment  of  any  court  of  record  may 
be  deposited  with  any  such  corporation,  that  has  been  designated  by  the  comp- 
troller of  the  state  of  New  York,  as  provided  by  the  code  of  civil  proceedure. 

By  amendments  passed  in  1898  and  3,901,  certain  trust  companies 
may  add  to  the  above  powers  those  of  safe  deposit^  title  insurance  and 
credit  guaranty. 

It  will  be  seen  that  the  powers  here  granted  are  very  wide.  Those 
fiduciary  powers  that  are  not  specifically   granted   are   conceded  by  the 


TRUST    COMPANY    LEGISLATION.  79 

general  power  to  aecept  api)ointiiieiit  to  act  in  "any  other  riduciary 
capacity,"  so  that  in  the  State  of  New  York  a  trust  company  may  act  in 
any  fiduciary  capacity  in  which  a  natural  person  may  act.  The  same 
broad  powers  are  given  to  trust  companies  in  most  of  the  other  States 
having  general  trust  company  laws,  and  are  included  in  the  special 
charters  in  most  of  the  States  creating  such  companies  by  special  nets. 
The  banking  ])owers  granted  in  New  York  are  <  xceptional.  however,  and 
are  granted  in  less  than  half  of  the  other  States;  but  by  very  liberal  con- 
struction of  the  statutes  trust  companies  frecpiently  transact  substantially 
a  banking  business  in  States  where  the  statut«-s  do  not  specify  such 
powers. 

Of  the  powers  usually  granted  to  trust  companies  by  the  State  laws, 
some  may  properly  be  looked  upon  as  essential  or  natural  to  a  "trust" 
or  "trustee"  company,  while  others  are  manifestly  auxiliary  to  its  essen- 
tial powers.  In  the  former  group  would  In-  inelud<(l  powers  to  act  as 
trustee  for  any  purpose,  as  executor,  administrator,  guardian,  agent,  etc. 
Other  powers,  such  as  banking,  savings  banking,  safe  deposit,  fidelity  and 
title  insurance,  etc.,  more  or  less  closely  allied  to  the  business  of  the 
typical  trust  company,  may  be  classed  as  auxiliary  powers. 

That  the  legislators  have  taken  some  such  view  of  the  case  is  evident 
from  a  study  of  the  powers  granted.  Both  in  the  States  having  general 
trust  company  laws  and  in  those  which  charter  trust  companies  by  spe- 
cial act  of  the  Legislature,  there  is  praotic.'l  unanimity  in  the  granting 
of  the  powers  included  in  the  first  group,  while  those  in  the  second  group, 
with  the  exception  of  safe  deposit,  are  not  so  generally  given. 

It  is  beyond  the  scope  of  the  present  inquiry  to  attempt  to  discuss 
the  powers  impliedly  given  to  trust  companies  by  the  various  statutes,  or 
to  assemble  the  decisions  of  the  courts  regarding  the  extent  of  such 
powers.  But  it  will  be  useful  to  compare,  briefly,  the  powers  explicitly 
given  to  these  companies  by  the  States  having  g«neral  trust  company 
laws. 

As  already  suggested,  the  greatest  unanimity  appears  in  the  grant- 
ing of  powers  to  act  as  trustee,  as  executor  and  administrator,  as  guard- 
ian, as  agent,  etc. 

The  power  to  act  as  executor  and  administrator  is  specifically  granted 
in  all  of  the  thirty-seven  States  named,  except  Kansas,  Maine,  Oregon 
and  Wyoming.  In  Kansas  it  would  seem  to  be  impliedly  granted  by  the 
wide  general  powers  conferred.  Wyoming  j)ermits  the  acceptance  of 
"any  trust  in  writing."  Maine  presents  an  interesting  case.  In  this 
State  trust  companies  may  act  as  executor;  but  are  expresslv  forbidden 
to  act  as  administrator  or  as  guardian,  even  if  their  special  charters 
specifically  grant  such  powers.  Tin  Oregon  statutes  do  not  enumerate 
the  powers  of  trust  companies. 

The  power  to  act  a$  guardian  of  minors,  persons  non  compos  mentis, 
(tc,  is  specifically  granted  in  all  of  the  thirty-seven  States  named  except 
Maine,  Oregon  and  Wyoming.     The  guardianship  of  minors  usually,  and 


80  TRUST    COMPANIES. 

of  other  persons  always,  applies  to  the  estate  only.  In  most  States  the 
power  named  is  to  act  "as  guardian  of  the  estates,"  etc.;  in  some,  it  is 
the  indefinite  power  to  '"act  as  guardian."  California,  Illinois,  Louisiana, 
Massachusetts,  Ohio  and  Tennessee  specifically  state  that  the  guardian- 
ship of  minors  shall  be  of  the  estate  only,  and  not  of  the  person.  On  the 
other  hand,  power  to  act  as  guardian  of  both  the  estate  and  the  person 
of  minors  is  specifically  given  in  Arkansas,  Indiana,  Kansas,  Minnesota 
and  Montana.  In  the  District  of  Columbia,  trust  companies  may  act  as 
guardian  of  the  estate  of  a  minor  only  with  the  consent  of  the  guardian 
of  the  person.  The  limitation  formerly  specified  in  the  New  York  stat- 
utes, providing  that  trust  companies  may  act  as  guardian  of  the  estates  of 
minors,  the  income  of  which  is  one  hundred  dollars  per  annum  or  more, 
is  also  found  in  the  statutes  of  Colorado  and  Georgia. 

Sixteen  of  the  States  and  Territories  specifically  grant  the  power  to 
accept  and  execute  trusts  for  married  women  with  respect  to  their 
separate  estates. 

A  power  always  included  is  that  to  act  as  trustee  for  various  purposes. 
It  is  usually  stated  that  the  company  may  act  as  trustee  for  individuals, 
for  corporations  both  public  and  private,  for  municipalities  and  States. 
The  power  to  act  as  fiscal  agent  and  as  registrar  and  transfer  agent  is  as 
a  rule  specifically  given,  as  are  also  the  powers  to  act  as  depositary  of 
funds  paid  into  court  and  of  funds  under  the  care  of  executors,  admin- 
istrators, guardians,  etc.;  to  manage  estates;  to  receive  trusts  from  courts; 
to  hold  deposits  of  trust  moneys;  to  act  as  receiver  or  assignee;  to  act 
as  agent  for  the  investment  of  money;  to  make  loans  on  real  or  personal 
property;  to  deal  in  bonds,  stocks  and  securities. 

Regulations  Regarding  the  Holding  of  Real  Estate. 

The  regulations  regarding  the  holding  of  real  estate  by  trust  com- 
panies are  usually  somewhat  more  liberal  than  those  which  govern  the 
real  estate  holdings  of  National  banks,  but  a  few  States,  notably 
Louisiana  and  Michigan,  make  provisions  almost  identical  with  those  of 
the  National  Banking  Act.  Most  of  the  States  grant  the  power  to  hold 
such  real  estate  as  is  necessary  for  the  transaction  of  the  company's  busi- 
ness, and  such  as  it  may  acquire  in  settlement  or  partial  settlement  of 
debts  due  to  it.  While  the  intent  usually  appears  to  be  to  limit  the  hold- 
ings much  as  those  of  National  banks  are  limited,  the  language  is  often 
such  as  to  permit  of  a  liberal  construction.  As  an  example  of  statutes 
permitting  such  liberal  construction,  that  of  New  Jersey  reads  as  follows : 
"To  lease,  hold,  purchase  and  convey  any  and  all  real  estate  necessary 
for  or  convenient  in  the  transaction  of  its  business,  or  which  the  purposes 
of  the  corporation  may  require,  or  which  it  shall  acquire  in  satisfaction 
or  partial  satisfaction  of  debts  due  the  corporation  under  sales,  judg- 
ments or  mortgages,  or  in  settlement  or  partial  settlement  of  debts  due 
the  corporation  by  any  of  its  debtors." 


TRUST    COMPANY    LEGISLATION.  81 

There  are,  however,  great  differences  in  thi-  wording  of  the  statutes 
in  tile  different  States  and  Territories  relating  to  this  matter,  and  it  is 
not  possible  to  form  a  correct  idea  of  their  purport  without  a  separate 
and  detailed  account  of  the  statutes  in  each  State.  Perhaps  the  widest 
powers  of  this  kind  are  those  of  trust  companies  in  Idaho  and  Pennsyl- 
vania, which,  besides  holding  real  estate  that  is  the  subject  of  title  in- 
surance by  them,  have  the  right  "'to  purchase  and  sell  real  estate  and 
take  charge  of  the  same,"  and  in  Utah,  where  they  may  "buy,  sell  or 
mortgage"   real  estate. 

The  right  to  hold  real  estate  in  trust  for  others  is  of  course  included 
in  the  trust  powers  given  to  trust  companies. 

Auxiliary   Powers  of   Trtst  Companies. 

Of  the  powers  usually  looked  upon  as  auxiliary  to  the  main  busines.s 
of  trust  companies,  that  of  conducting  a  safe-deposit  business  is  the  one 
which  the  States  are  most  nearly  unanimous  in  granting.  Indeed,  this 
business  has  come  to  be  looked  upon  as  being  quite  as  essential  to  trust 
companies  in  the  larger  cities  as  any  other   function. 

The  fidelity  insurance  business  is  specifically  permitted  to  trust  com- 
panies in  about  half  of  the  States  and  Territories,  while  in  a  number  of 
others  trust  companies  are  given  more  or  less  limited  powi-rs  in  the  way 
of  guaranteeing  bonds  and  acting  as  surety  for  particular  purposes. 
West  Virginia  specifically  prohibits  trust  companies  from  acting  as 
surety  on  bonds  or  guarantor  for  individuals,  firms  or  corporations. 
Connecticut  prohibits  trust  companies  from  engaging  in  any  kind  of  in- 
surance business,  except  that  certain  companies  already  engaged  in  title 
insurance  are  allowed  to  continue. 

About  a  third  of  the  States  grant  the  specific  j)ower  to  trust  compa- 
nies to  conduct  a  title  insurance  business.  In  Pennsylvania  trust  com- 
panies are  organized  under  the  title  insurance  company  law,  which 
giants  most   of  the   trust   powers. 

Banking  Powers  of   Trust   Comp.\nies. 

In  view  of  the  great  extent  to  which  trust  companies  engage  in  the 
business  of  both  savings  and  commercial  kanking.  the  statutory  pro- 
visions regarding  the  transaction  of  such  business  are  of  special  interest. 
But  even  a  cursory  examination  of  the  statutes  reveals  the  fact  that  the 
power  to  conduct  such  business  usually  depends  more  upon  the  implied 
powers  and  upon  the  interpretation  of  the  statutes  than  upon  powers 
specifically  granted.  One  is  met  at  the  outset  by  the  question  as  to  what 
constitutes  banking  powers  as  distinguished  from  trust  powers  in  the 
handling  of  funds.  There  is  evidence  that  the  legislators  themselves 
were  in  most  cases  not  clear  as  to  the  extent  to  which  they  were  permit- 
ting the  banking  business.  In  several  States,  as  for  example  Colorado 
and  Pennsylvania,  trust  companies  are  forbidden  to  engage  in  banking 
6 


82  TRUST    COMPANIES. 

"except  as  lierein  authorized;"  while  they  seem  to  be  authorized  to  un- 
dertake several  important  banking  functions.  In  Colorado  specific  pow- 
ers are  granted  to  receive  demand  deposits  and  to  "purchase"  bills  of 
exchange,  etc.,  and  to  loan  on  real  or  personal  security.  The  same 
powers  are  held  by  trust  companies  in  Pennsylvania.  The  power  to  pur- 
chase commercial  paper  differs  only  in  form  from  the  power  to  discount 
it,  and  not  much  ingenuity  is  required  to  do  an  actual  discount  business 
under  these  statutes,  and  such  discounting  in  the  form  of  purchase  is 
widely  carried  on  in  Pennsylvania. 

So  far,  then,  as  the  receiving  of  both  demand  and  time  deposits,  the 
discounting  of  commercial  paper  and  the  making  of  loans  on  real  and 
personal  security  constitute  a  banking  business,  trust  companies  in  these 
States  may  do  a  banking  business  in  spite  of  the  apparent  intention  to 
forbid  such  business. 

Another  interesting  case  is  that  of  New  Jersey.  In  this  State  trust 
companies  are  forbidden  "to  discount  commercial  paper;"  but  they  have 
specific  authority  "to  purchase,  invest  in  and  sell  *  .  *  *  promissory 
notes,  bills  of  exchange.  '^  *  ""  "  They  also  have  specific  authority 
to  receive  deposits  subject  to  check. 

About  twenty  of  the  States  and  Territories  appear  to  grant  the 
specific  power  to  purchase  or  discount  commercial  paper,  while  about  the 
fcame  number  grant  the  specific  power  to  receive  both  time  and  demand 
deposits.  Unquestioned  power  to  do  a  banking  business  is  given  in  Ala- 
bama, Arkansas,  Georgia,  Idaho,  Louisiana,  Maine,  Mississippi,  Mon- 
tana, New  York,  North  Carolina,  Oregon,  Tennessee,  Texas,  Utah, 
Washington,  West  Virginia  and  Wyoming.  In  Ohio  and  Kentucky, 
while  trust  companies  organized  simply  as  such  may  not  do  banking, 
companies  may  be  organized  to  do  both  kinds  of  business.  An  analogous 
case  is  that  of  Illinois,  where  banks  may  be  given  trust  powers.  In 
several  other  States  the  statutes  readily  permit  the  interpretation  of 
granting  banking  powers.  Indiana,  Michigan,  Minnesota  and  Wisconsin 
specifically  prohibit  banking. 

The  fact  is  that  it  is  a  very  difficult  task  to  draw  a  hard  and  fast 
line  between  banking  business  and  business  in  the  handling  of  money 
that  is  purely  and  simply  a  trust  business.  Indeed,  banking  is  itself,  in 
a  sense,  a  trust  business.  If  extreme  instances  be  taken,  it  is  of  course 
a  simple  matter  to  say  that  this  is  a  trust  business,  and  that  is  a  banking 
business.  But  just  where  to  draw  the  line  between  the  two  classes  of 
functions  is  quite  a  different  matter.  When,  therefore,  the  legislator  sets 
before  himself  the  task  of  forbidding  trust  companies  to  do  a  banking 
business,  he  must  solve  not  only  the  problem  of  how  to  provide  for  the 
enforcement  of  the  statutes  he  may  devise,  but  also  the  more  intricate 
problem  of  clearly  distinguishing  between  that  which  he  means  to  au- 
thorize and  that  which  he  means  to  forbid.  On  the  whole,  considering  the 
difficulty  of  the  problem,  and  the  industrial  conditions  under  which  trust 
companies   have  developed,   it   is  not  surprising  that  trust  companies  in 


TRUST    COMPANY    LKCUSI.ATKXN.  83 

most  States  do  a  baiikiDg  busimss  in  sj)itf  of  tin-  lack  of  specific 
authority. 

A  noticeable  thin^  about  the  powi^rs  usually  ^'rant«d  to  trust  compa- 
nies is  the  evident  intention  to  place  them  on  an  absolute  par  with  nat- 
ural persons  in  their  power  to  accept  and  execute  trusts  of  every  de- 
scription. In  a  considerable  number  of  the  States  the  statutes  carefully 
provide  that  such  corporations  may  accept  and  execute  any  trusts  not 
inconsistent  with  the  laws  of  the  State  and  of  the  United  States,  "to  the 
same  extent   and  in  the  same  maimer  as   natural   persons." 

Regarding  the  j)owers  of  trust  companies  in  those  States  where  their 
charters  are  granted  only  by  special  act  of  the  Legislature,  it  is  not 
possible  to  speak  in  general  terms  without  an  examination  of  each  and 
every  such  chartir,  further  than  to  say  that  as  a  general  rule  the  powers, 
so  given  are  quite  as  wide  and  as  varied  as  those  given  by  general  laws. 

In  the  few  States  in  which  no  trust  company  laws  exist,  and  where 
special  charters  are  not  granted,  considerable  ingenuity  has  U-en  neces- 
sary to  carry  on  the  trust  business  under  the  general  corporation  laws. 
Americans  are  not  lacking  in  ingenuity,  and  the  way  has  usually  been 
found  when  needed.  Thus,  where  the  corporation  had  not  the  power  to 
act  as  trustee,  administrator,  etc.,  individual  directors  or  officers  have 
taken  such  appointments,  the  companies  have  furnished  the  necessary 
security,  and  the  business  in  its  details  has  been  performed  by  the  com- 
pany. In  the  State  of  Washington,  before  the  passage  (in  1903)  of  the 
Trust  Company  Law,  some  of  the  courts  held,  contrary  to  the  usual  legal 
ruling,  that  trust  companies,  being  created  artificial  "persons,"'  were 
therefore  endowed  with  the  powers  of  natural  "j)ersons."  The  well- 
established  principle  of  the  common  law  is  that  coriX)rations  possess  only 
such  powers  as  are  s})eeiHeally  granted   in  their  ehartt  rs. 

Statutory  Provisions  for  the  REr.i'L.XTioN  of  Thi'st  Co.mpanies. 

Statutes  intended  to  throw  safeguards  about  the  prosecution  of  the 
business  of  trust  companies  are  found  in  a  majority  of  the  States  and 
Territories  having  general  trust  company  laws,  and  also  among  a  num- 
ber of  the  .States  in  which  such  cor)ioratioiis  are  ch.irtered  by  special  acts 
of  the  Legislatures. 

The  methods  commonly  relied  upon  in  such  statutory  attempts  at  reg- 
ulation and  supervision  include  provisions  for  a  capital  adequate  to  su|)- 
port  the  probable  credit  operations  of  the  company  and  to  provide  secur- 
ity for  its  creditors;  the  accumulation  of  a  surplus  fund,  to  supplement 
the  good  acconi))lished  by  the  provision  for  ade<juate  capital:  the  doubl.- 
liability  of  stockholders;  deposit  with  State  authorities  by  the  trust  com- 
pany of  moneys  or  securities  to  Ik-  h<ld  in  trust  for  the  security  of  cred- 
itors of  the  trust  department;  restrictions  on  loans,  on  investments,  on 
general  liabilities  and  on  the  manner  of  conducting  the  trust  business;  .i 
sufficient  reserve  fund :  supervision  by  State  officials,  through  reports  of 
condition,  and   examinations. 


84  TRUST    COMPANIES. 

Few  States  attempt  all  these  methods  of  regulation,  and  the  lack  of 
uniformity  in  the  State  laws  in  this  particular  is  noticeable  and  regret- 
table. 

The  suggestion  has  been  made  that  Federal  control  of  trust  compa- 
nies would  be  of  advantage,  especially  to  the  end  of  securing  uniformity 
in  the  laws  governing  such  corporations.  Doubt  has  been  expressed 
whether,  in  view  of  the  diversity  of  conditions  existing  in  the  various 
States  and  Territories,  a  uniform  law  is  desirable,  the  opinion  being  held 
by  many  that  to  place  all  trust  companies  under  uniform  restraint,  irre- 
spective of  local  conditions,  would  unduly  restrict  the  operations  of  these 
corporations.  However  this  maj'^  be,  a  uniform  law  seems  to  be  imprac- 
ticable for  other  reasons.  It  seems  possible,  however,  that  effectual  reg- 
ulation might  be  obtained  by  concerted  action  on  the  part  of  trust  com- 
pany officials  and  their  associations.  The  matter  has  already  engaged 
the  attention  of  the  Trust  Company  Section  of  the  American  Bankers' 
Association. 

The  provisions  of  the  various  States  and  Territories  regarding  the 
minimum  capital  with  which  trust  companies  may  be  organized  have  al- 
ready been  discussed.  It  need  only  be  added  now  that  for  the  most  part 
the  provisions  in  this  matter  are  all  that  could  be  expected.  In  most 
cases,  the  minimimi  capital  required  could  hardly  be  raised  without  prac- 
tically prohibiting  the  organization  of  trust  companies.  It  is  generally 
recognized  that  trust  companies  ought  to  have  a  larger  capitalization 
than  banks,  and  the  amoiuit  required  usually  compares  very  favorably 
with  that  required  for  both  State  and  National  banks  in  the  same  com- 
munities; the  minimum  capital  being  as  a  rule  from  two  to  ten  times  as 
large  as  that  required  of  State  banks.  In  not  over  half  a  dozen  States 
is  the  capital  of  trust  companies  as  low  as  that  of  State  banks. 

The  accumulation  of  a  surplus  fund  is  a  proceeding  that  trust  com- 
panies in  most  communities  adopt  as  a  matter  of  course,  being  imj^elled 
thereto  by  the  manifest  advantages  of  such  a  step  as  a  measure  of  safety 
and  as  a  means  of  gaining  business  in  competition  with  other  companies 
having  large  surplus  funds.  Perhaps  it  is  on  this  account  that  the  legis- 
lators have  not  generally  considered  it  necessary  to  place  in  the  statutes 
a  requirement  for  the  accumulation  of  such  a  fund,  although  it  may  also 
be  explained  by  the  other  provisions  for  safety  adopted,  which  may  have 
been  thought  ample  in  many  cases.  At  any  rate,  only  a  minority  of  the 
States  and  Territories  require  the  accumulation  of  a  surplus  fund  by 
trust  companies.  Idaho,  I>ouisiana,  Michigan,  New  Mexico,  New  York, 
New  Jersey,  Ohio,  Oregon,  Washington  and  West  Virginia  require  that 
before  a  dividend  is  declared  one-tenth  of  the  net  earnings  shall  be  car- 
ried to  a  surplus  fund  until  such  fund  amounts  to  20  per  centum  of  the 
capital.  Kansas  and  Texas  require  that  the  same  percentage  of  earnings 
be  carried  to  surplus  fund  imtil  the  latter  equals  one-half  of  the  capital, 
and  South  Dakota,  until  it  equals  30  per  centum  of  the  capital.  Missouri 
requires  that  one-tenth  of  the  net  earnings  be  carried  to  a   "guaranty" 


TRUST    C{)M1>ANY    LEGISLATION.  85 

fund,  until  the  fund  i<ium1s  the  capital.  Only  a  f.w  other  States  have 
provisions  of  this  kind. 

In  some  States,  the  double  liability  of  stoekholders,  i.  e..  the  provision 
that  stockholders  sh,-^ll  be  liable  for  the  debts  of  the  corporation  to  an 
amount  equal  to  the  par  value  of  their  stock,  in  addition  to  full  payment 
for  such  stock — applies  to  all  corporations,  tru.st  companies  among 
them.  This  was  the  case  in  Ohio,  until  in  1  {>().'!.  by  vote  of  the  pcoplr,  an 
amendment  to  the  constitution  removing  such  double  liability  was  carried. 
Just  how  this  aflects  companies  already  existing  is  a  question  for  the 
courts  to  decide.  At  present  the  laws  apply  the  doubh-  liability  of  stock- 
holders to  trust  companies  in  ('olorado,  the  District  of  Columbia.  Geor- 
gia, Idaho,  Illinois  (if  doing  banking  business),  Indiana,  Iowa,  Kansas. 
Kentucky,  Maine,  Maryland,  Massachusetts,  Michigan,  Minnesota  (con- 
stitutional rtquirement),  Montana.  New  York,  North  Carolina,  Rhode 
Island,  South  Carolina  (if  doing  banking).  South  Dakota,  L'tah,  Texas, 
Vermont,  Washington,  West  \'irginia  and  Wyoming. 

Sixteen  of  the  States  require  trust  companies  to  deposit  cash  or  se- 
curities of  a  specified  character  with  State  officials,  to  Ik-  held  in  trust 
as  security  for  the  company's  creditors.  .As  a  rule  these  deposits  arc  for 
the  special  protection  of  creditors  of  the  trust  department,  and  in  such 
cases  the  deposit  is  ordinarily  not  required  unless  the  company  under- 
takes such  trusts  as  those  of  executor,  administrator,  guardian,  itc.  A 
few  of  the  States,  however,  make  this  deposit  a  protection  to  all  of  the 
company's  creditors,  and  require  such  deposit  before  the  company  is 
authorized  to  do  business.  The  income  from  such  deposits  goes  to  the 
company  so  long  as  it  is  solvent.  In  several  States  the  deposit  is  stated 
to  be  in  lieu  of  giving  special  bond  or  security  in  the  case  of  each  trust, 
and  need  not  be  made  if  the  company  elects  to  give  such  special  Ixinds 
instead.  The  amount  of  the  deposit  is  $50,000  in  North  Dakota.  Okla- 
homa and  Texas;  $100,000  in  California;  .f'JOO.OOO  in  Missouri.  In  Illi- 
nois it  is  .$200,000  in  cities  of  100,000  or  more  inhabitants,  and  $50,000 
in  smaller  cities.  In  Michigan,  it  is  fifty  per  cent,  of  the  capital,  but 
not  more  than  $'^200,000  in  amount;  in  Wisconsin,  fifty  per  cent,  of  the 
capital,  but  not  more  than  $100,000  in  amount.  The  District  of  Colum- 
bia requires  a  deposit  to  the  amount  oi  one-fourth  of  the  capital.  Min- 
nesota requires  the  deposit  to  be  at  least  $50,000,  and  not  less  than  one- 
fourth  of  the  capital.  In  New  Jersey  the  securities  so  deposited  must 
equal  in  value  at  least  one-fifth  of  the  liabilities  incurred  as  assignee,  re- 
ceiver, administrator,  guardian  or  trustee,  unless  the  deposit  amounts  to 
at  least  $100,000,  in  which  case  it  need  be  only  one-tenth  of  such  liabili- 
ties. The  amount  of  the  deposit  in  New  Mexico  is  from  $50,000  to 
$'200,000.  In  New  York  it  must  amount  to  ten  per  cent,  of  the  paid-up 
capital,  but  not  less  than  $100,000  in  amount  in  cities  whose  population 
exceeds  one  hundred  thousand.  $50,000  in  cities  of  from  on«-  hundred 
thousand  to  five  hundred  thousand,  $30,000  in  cities  of  from  twenty-five 
to  one  hundred  thous.md.  :ind  $'i0.000  in  smaller  plac<-s.  Maryland  rc- 
(juires   fifteen   per  etJit.   of  the    capital,     and     not    less   than   $30,000   in 


86  TRUST    COMPANIES. 

fimount;  Virginia,  five  per  cent,  of  the  capital,  and  not  less  than  $12,500 
nor  more  than  $25,000  in  amount.  In  Ohio,  the  amount  is  $100,000  for 
companies  whose  capital  is  more  than  $200,000,  and  $50,000  for  smaller 
companies.  Instead  of  a  deposit,  South  Dakota  requires  trust  companies, 
before  undertaking  any  trust,  to  furnish  a  bond  in  favor  of  the  State  in 
an  amount  equal  to  the  capital. 

Restrictions   in   Rklation   to    Loans. 

The  majority  of  the  States  having  any  kind  of  trust  company  legis- 
lation place  restrictions  on  trust  companies  regarding  their  loans,  their 
investments  or  their  total  liabilities.  Such  restrictions  vary  greatly  in  the 
different  States,  being  quite  ample  in  some,  and  very  meagre  in  others. 
The  most  common  provisions  are  those  forbidding  trust  companies  to 
make  loans  on  their  own  stock  as  security,  and  to  make  loans  to  their 
<lirectors,  officers  or  employees.  Where  the  classes  of  investments  for 
capital  and  trust  funds  are  specified,  the  investments  permitted  are 
usually  in  municipal  bonds,  railroad  bonds  and  mortgages  secured  by 
ample  margin  on  real  estate.  T!ie  provision  that  neither  the  deposits 
nor  the  loans  may  be  allowed  to  exceed  ten  times  the  amount  of  the  paid- 
up  capital  and  surplus  is  found  in  the  statutes  of  California,  Illinois  and 
Maryland;  but  in  the  last-named  State  it  does  not  apply  to  funds  depos- 
ited by  order  of  the  courts.  Colorado  forbids  trust  companies  to  invest 
in  the  stocks  or  bonds  of  private  incorporated  companies.  Among  other 
provisions  sometimes  found  are  those  limiting  the  amount  of  loans  to  one 
person,  firm  or  corporation,  the  limit  ofteii  being  ten  per  cent,  of  the 
■capital  and  surplus,  except  that  on  loans  secured  by  collateral  it  may  be 
twenty  per  cent. 

Many  of  the  States  provide  that  trust  funds  and  accounts  must  be 
kept  separate  from  all  other  funds  and  accounts  of  the  company. 

Largely  as  a  result  of  efforts  made  by  the  American  Bankers'  Asso- 
ciation, statutes  have  been  passed  in  a  number  of  States  forbidding  the 
use  of  the  word  "trust"  in  titles  by  any  but  regularly  organized  trust 
•companies.  The  following  now  have  legislation  of  this  character: 
Alabama,  California,  Colorado,  Connecticut,  Hawaii,  Indiana,  Iowa,  Kan- 
sas, Maine,  Massachusetts,  Minnesota,  Mississippi,  Montana,  New  Jersey, 
New  York,  Oregon,  Rhode  Island,  Texas,  Washington,  West  Virginia, 
Wisconsin  and  Wyoming. 

Trust   Company   Reskrves. 

The  question  of  trust  company  reserves  is  of  special  interest.  The 
fact  that  trust  companies  compete  to  so  great  an  extent  with  banks  has 
resulted  in  a  growing  demand  from  the  banks  especially,  and  from  the 
general  public  to  some  extent,  that  trust  companies  be  placed  under  the 
same  regulations  as  banks,  particularly  in  the  requirement  of  a  reserve 
fund.  The  battle  over  this  point  has  been  waged  with  special  fierceness 
in  New  York,  where,  until  1908,  there  was  no  provision  for  reserves  of 


TRUST    COMPANY    LEGISLATION.  87 

trust  companies.  Tliat  there  is  need  for  such  aji;itution  lb  shown  [>y  the  fact 
that  about  a  third  of  the  States  and  Territories  have  no  satisfactory  re- 
quirements regarding  reserves.  This  does  not  mean,  of  course,  that  trust 
companies  in  these  States  do  not  actually  keep  reserve  funds,  for 
the  unwitten  laws  of  business  and  of  competition  are  quite  as  insistent 
upon  obedience  as  are  the  laws  of  the  statute  books.  The  best- 
managed  companies  everywhere  keep  as  large  reserves  as  their 
business  demands ;  and  it  is  for  the  poorly-managed  concerns  that  the 
statutory  provisions  are  necessary,  just  as  criminal  laws  are  needed,  not 
for  the  law-abiding  people,  but  for  tlu!  lawless.  If  the  wisdom  of  State 
legulation  in  any  particulars  is  conceded,  the  necessity  of  a  recjuirement 
for  an  adequate  reserve  fund  certainly  umst  be. 

An  examination  of  the  statutes  shows  that  where  the  tjuestion  has 
been  taken  up  and  acted  upon  by  the  State  legislators,  the  opinion  has 
quite  generally  prevailed  that  the  reserve  required  to  be  kept  by  trust 
companies  ought  to  be  about  the  same  as  that  required  of  State  banks. 

The  following  table  shows  the  reserves  required  of  trust  companies 
in  various  States.  Except  where  otherwise  stated,  the  percentages  refer 
to  the  ratio  of  resen-c  to  aggregate  deposits.  In  some  cases  the  reserve 
named  in  the  table  applies  to  trust  companies  only  when  they  do  a  bank- 
ing business ;  in  which  case  it  is  frequently  the  same  as  for  banks. 

Alabama  15%,  2-5  in  cash. 

California  20%  in  cities  of  200,000  or  more;  15%  eisewliere:   %  in  rash. 

Connecticut         15%,  4-15  in  cash. 

Idaho  15%,  Vz   in  cash. 

Kansas  25%  of  demand,  10%  of  time  deposits. 

Louisiana  25%  of  demand  deposits,  8%  in  casii. 

Maine  1,5%  of  deposits  pa\al)Ie  on  demand  or  within  ten  days. 

Massachusetts  In  Boston,  20%  of  agjrr^Mjate  deposits  less  time  deposits  not  pay- 
able within  tiiirty  days;  elsewhere,  15%  of  same;  2-5  in 
cash.     Reserve  companies  in  Boston,  14  in  cash. 

Michigan  20%  of  "Matured  obligations  and  money  due  and  payable."  Vi  in 

cash. 

Missouri  15%  of  demand  deposits. 

Montana  15%. 

New  Jersey        15%  of  demand  deposits,  1-5  in  casli. 

New  Mexico        15%  of  lial)ilities,  less  deposit  with  'IVrritorj".      2-5   in  cash. 

New  York  Reserves  are  fifrured  on  agKrepate  deposits  less  trust  funds,  time 

deposits  not  payable  within  thirty  days,  and  deposits  secured 
hv  New  York  State  bonds. 
In  New  York  city.  l)orough  of  Manhattan,  15%.  all  in  cash. 
In  New  York  city,  other  iiomughs,  15%.  2-3  in  cash. 
Elsewhere  in  state,  10%,   ^   in  cash. 

North  Carolina  15%.  2-5  in  cash. 

Ohio  15%,  ()%   of  deniantl   and  1%   of  time  deposits  in  cash. 

Oregon  15%  of  demand  and   1<)^;    of  time  deposits,  in  cities  of  less  than 

50.000;  elsewhere,  25%  of  demand  and  10%  of  time  deposits. 
1-3  in  cash. 

Pennsylvania      15%  of  denumd  and  7»4%  o(  time  deposits,  1-3  in  cash. 

Rhode  Island      15%,  :-5  in  cash.     (Savirgs  department  excepted.) 

South  Dakota    25%   of  demand   and   10%   of  tinie  deposits. 

Texas  25%   of  demand  deposits.  1-10  in  cash. 

Washington        20%  of  demand  deposits. 

West  Virginia    15%  of  demand  deposits.  2-5  in  cash. 

Wyoming  25%. 


88  TRUST    COMPANIES. 

Reports  and  Examinations. 

Whatever  restrictions  are  placed  upon  these  corporations  by  the 
statutes,  such  restrictions  must  evidently  be  of  little  avail  in  the  cases  of 
those  companies  which  are  inclined  to  evade  the  law,  unless  means  be 
provided  of  keeping  the  State  officials  acquainted  with  the  way  in  which 
their  business  is  being  conducted.  The  natural  ways  of  accomplishing^ 
this  result  are  by  means  of  frequent  reports  and  of  examinations.  The 
value  of  reports  is  of  course  in  direct  ratio  to  the  honesty  and  frankness 
of  the  officials  of  the  company  making  such  repQrt,  and  their  usefulness- 
therefore  becomes  slight  when  made  by  dishonest  officers.  It  is  a  matter 
of  common  knowledge  that  reports  may  be  easily  "doctored"  so  as  to 
make  an  insolvent  institution  appear  very  prosperous,  and  that  the  last 
reports  published  by  defunct  companies  usually  indicate  a  sound  condi- 
tion. But  if  the  requirement  of  reports  be  made  in  connection  with  fre- 
quent examinations  which  reveal  the  truthfulness  or  untruthfulness  of 
the  reports,  they  serve  a  useful  purpose. 

The  laws  now  require  trust  companies  to  furnish  reports  in  over 
forty  of  the  States  and  Territories.  The  frequency  of  such  reports  varies 
from  one  to  five  times  per  annum;  and  in  the  States  having  the  most 
carefully  prepared  laws  on  the  subject,  special  reports  may  be  called 
for  at  any  time  by  the  State  official  to  whom  the  reports  are  made.  In 
Tennessee  the  reports  are  not  made  to  any  official,  but  are  merely  pub- 
lished in  a  newspaper.  A  number  of  the  States  designate  the  character 
of  the  information  to  be  given  in  the  reports,  and  some  of  them  specify 
in  detail  and  at  some  length  the  exact  form  required  for  such  reports, 
the  form  in  a  few  States  requiring  a  complete  list  of  all  investments,  and 
a  description  of  the  property  held  in  trust.  The  completeness  of  these 
reports  is  in  striking  contrast  with  the  meagreness  of  those  which  satisfy 
the  requirements  of  the  law  in  some  of  the  States,  where  the  provisions 
on  the  subject  are  most  unsatisfactory.  Most  of  the  States  which  re- 
quire reports  provide  that  they  must  be  published  in  a  local  newspaper. 

Trust  companies  are  liable  to  some  sort  of  an  examination  by  State 
officials  in  about  fort}'  of  the  States ;  but  in  about  one-fourth  of  these  the 
examinations  need  not  be  made  periodically,  but  only  at  the  discretion 
of  an  official  who  very  probably  has  little  time  or  inclination  for  the 
work,  so  that  companies  may  go  for  years  without  examination.  In  all 
of  the  States  the  courts  probably  have  the  right  to  investigate  a  trust 
company's  handling  of  trusts  committed  to  them  by  such  courts  to  the 
same  extent  as  though  the  trusts  were  committed  to  individuals.  This 
right  is  specifically  mentioned  in  a  majority  of  the  States.  A  few  States 
also  provide  that  the  books  of  the  company  shall  be  open  to  inspection 
by  persons  interested  in  any  trust  held  by  the  company. 

Where  periodical  examinations  are  required,  their  frequencj'^  is  either 
once  or  twice  per  annum,  with  special  examinations  at  any  time  at  the 
discretion  of  the  examining  official. 


TRUST    COMPANY    l.FXilSLATlON.  89 

Tlie  State  officials  undrr  whose  suptrvision  triiht  compaiiifs  arc  placed 
in  the  different  States  vary  greatly.  Where  a  State  banking  department 
is  in  existence,  the  head  of  that  department  has  supervision  of  trust  com- 
panies. In  a  few  States  this  duty  is  entrusted  to  the  State  Insurance 
Commissioner.  In  other  States  it  is  «X(rcised  by  the  State  Auditor,  the 
State  Treasurer,  or  the  Secretary  of  State.  In  the  District  of  Columbia 
the  Comptroller  of  the  Currency  has  supervision  of  trust  companies. 

In  over  a  dozen  States  trust  eonijjanies  are  under  practically  the  same 
regulations  regarding  rej)orts,  examinations,  etc.,  as  the  State  banks. 

The  principle  of  State  supervision  of  banks,  insurance  companies 
and  other  financial  institutions  is  pretty  thoroughly  established  in  this 
country,  although  there  are  those  whose  strong  objections  to  "paternal- 
ism" in  government  lead  them  to  look  with  disfavor  upon  such  super- 
vision. The  excellent  record  of  the  National  banking  system  certainly 
affords  strong  argument  for  Government  supervision  of  banks.  This  is 
perhaps  not  the  place  to  discuss  the  general  (juestion;  but  if  the  prin- 
ciple of  supervision  is  accepted,  as  in  the  writer's  <»pinion  it  ought  to  be, 
there  is  certainly  great  room  for  improvement  in  the  laws  of  most  of  the 
States  and  Territories  in  the  regulation  and  supervision  of  trust  compa- 
nies. Less  than  one-half  of  them  can  be  said  to  havt-  satisfactory  stat- 
utes for  the  control  of  such  institutions. 

On  the  other  hand,  it  may  be  said  with  nuich  truth  that  great  prog- 
ress has  been  made,  and  that,  considering  the  short  time  that  trust  com- 
panies have  been  a  factor  in  the  financial  world,  the  progress  has  been 
quite  remarkable.  It  took  many  years  to  develop  our  banking  systems 
out  of  the  chaotic  conditions  of  the  first  half  of  the  nineteenth  century. 
Then,  too,  the  attitude  of  the  trust  companies  themselves  promises  much 
for  rapid  advancement  in  legislation  regarding  them.  The  great  major- 
ity of  the  leading  companies  welcome  the  placing  of  greater  safeguards 
about  the  business.  In  a  number  of  instances  legislation  designed  to 
regulate  trust  companies  has  come  through  the  agitation  of  the  subject 
by  the  trust  companies  themselves.  Many  trust  companies  in  States 
where  the  laws  do  not  require  examinations  are  in  the  habit  of  l)aving 
their  business  thoroughly  examined  by  expert  accountants. 


CHAPTER   V. 

SUMMARY  OF  STATE  AND  TERRITORIAL  LAWS  RELATING 
TO  TRUST  COMPANIES. 

The  aim  in  the  preparation  of  this  summary  has  been  to  include  the  essen- 
tial facts,  greatly  condensed,  of  the  laws  of  the  several  States  and  Territories 
specifically  relating  to  trust  companies.  Effort  has  been  made  to  have  it 
correct  as  far  as  it  goes,  and  to  include  the  latest  legislation  on  the  subject 
The  scope  of  the  work  is,  however,  limited  to  a  summary  of  statutes  specifi- 
cally relating  to  trust  companies,  and  no  effort  has  been  made  to  include 
reference  to  all  corporation  or  banking  laws  that  might  be  construed  as  applying 
to  trust  companies. 

The  writer  wishes  to  acknowledge  his  indebtedness  to  oflBcials  of  the  vari- 
ous States  and  Territories  for  copies  of  State  and  Territorial  laws  on  the 
subject  and  for  information  furnished;  and  also  to  E.  A.  Feasel,  Librarian  of 
the  Cleveland  Law  Library,  for  courtesies  extended  in  the  use  of  the  library, 
without   which   the   preparation   of   this    sunmiary    would    have    been   impossible. 

Alabama. 

THREE  or  more  persons  may  incorporate  for  the  purpose  of  carrying 
on  any  lawful  business,  under  the  Business  Corporation  Act,  sec- 
tion 16  of  which  defines  the  powers  of  banks  and  trust  companies 
doing  a  banking  business.  The  powers  specified  are  to  do  a  regular  bank- 
ing business,  including  discounting;  to  make  loans  of  all  kinds;  to  issue 
bills  to  circulate  as  money,  upon  the  terms  prescribed  in  the  Constitution 
of  tlie  State;  to  become  trustees  for  any  purpose;  to  be  appointed  and  to 
act  as  executors,  administrators,  guardians  and  receivers;  and  to  "do  any 
business  and  exercise  any  powers  incident  to  the  business  of  trust  com- 
panies doing  a  banking  business."  Married  women  and  children  may 
control  their  own  deposits.  Stockholders  are  not  subject  to  double  lia- 
bility. Stockholders  have  the  right  of  access  to  the  books  and  records  at 
reasonable  and  proper  times.  Trust  companies  may  consolidate  with 
other  banks  or  trust  companies. 

Reports  according  to  a  form  prescribed  by  him  must  be  made  to  the 
State  Treasurer  not  less  than  twice  each  year,  such  reports  to  be  as  of 
any  past  day  specified  by  the  Treasurer.  They  must  be  published  in  a 
local  paper.  The  State  Bank  Examiner,  who  is  under  the  direction  of 
the  State  Treasurer,  must  examine  each  company  at  least  once  a  year, 
without  previous  notice,  and  oftener  if  so  directed  by  the  State  Treas- 
urer. The  capital  required  is  $25,000  in  towns  of  less  than  5,000  inhab- 
itants; $75,000  in  cities  of  from  5,000  to  30,000;  $100,000  in  larger  cities. 
The  reserve  required  is  15  per  centum,  of  which  two-fifths  must  be  in  cash 
in  vaults.  Loans  may  not  be  made  to  officers  or  employees  "without  good 
security."  Loans  to  one  party  may  not  exceed  10  per  centum  of  the  capi- 
tal, surplus  and  undivided  profits,  uifless  amply  secured  by  good  collat- 
eral or  approved  by  a  majority  of  the  board  of  directors. 


STATE    AND    TERRITORIAL    LAWS.  91 

Prior  to  the  p.-issajje  of  the  .-ihove-named  Act.  in  ipOf?,  trust  compa- 
nies were  chartered  hv  special  acts  of  the  Legislature,  and  such  charters 
usually  grant  ample  ))owers. 

(General  Laws  IpO:",,  Xos.  SD;"  and  r^2'2;  Laws  1907,  No.  2J3.) 

AuiZONA. 

Trust  conipanirs  are  incorporated  under  the  general  incorporation 
law,  under  which  any  number  of  persons  may  associate  for  incorporation 
"for  the  transaction  of  any  lawful  business."  The  trust  company  law  is 
found  in  the  Acts  of  1903,  No.  3L  Powers  specified,  to  act  as  executor, 
administrator,  guardian,  trustee,  or  guardian  of  the  estate  of  a  lunatic, 
idiot,  minor,  "or  to  act  in  any  other  fiduciary  capacity  as  if  it  were  a 
natural  person."  The  articles  of  incorporation  must  authorize  such 
powers.  The  courts  are  given  power  to  make  such  appointments.  Such 
courts  or  officers  making  appointments  may  require  the  company  to  give 
such  security  as  they  deem  proper,  and  to  make  orders  regarding  the 
trusts  committed  to  them  and  to  require  all  accounts  that  they  might  re- 
quire of  a  natural  person  acting  in  the  same  capacity.  Trust  companies 
are  forbidden  to  make  loans  on  their  capital  stock,  or  to  purchase  same 
except  to  prevent  losses  on  debts  previously  contracted.  They  must  re- 
port to  the  Auditor  of  the  Territory,  who  is  ex-officio  Hank  Comptroller, 
finnually.  The  Comptroller  must  examine  each  company  annually  or 
oftener,  and  after  each  examination  report  their  condition  to  the  .\ttor- 
ney-General. 

(Code  1901,  i)aragraphs  130.  131.  76  i.  Acts  1903,  No.  31.  Acts 
1907 J  No.  96.) 

Arkansas. 

Three  or  more  persons  may  associate  under  the  provisions  of  the 
general  incorporation  law  to  be  incorj)orated  as  a  trust  company.  Arti- 
cles of  association  shall  state  the  face  value  of  the  shares,  but  same  may 
not  be  more  than  $1,000.  The  capital,  paid  up,  must  l>e  not  less  than 
$100,000  in  counties  whose  ])oi)ulation  exceeds  oO.OOO;  not  less  than 
$75,000  in  counties  whose  po})ulation  is  from  40.000  to  50,000;  and  in 
no  event  less  than  $50,000.  Powers  specified,  to  receive  moneys  in  trust, 
and  to  accumulate  same;  to  allow  interest  at  not  exceeding  the  highest 
rate  allowed  by  law;  to  accept  and  execute  all  such  trusts  and  perform 
such  duties  of  every  description  as  may  be  commiHed  to  them  by  State 
or  United  States  courts;  to  hold  real  or  personal  estate  or  trusts  created 
in  accordance  with  the  laws  of  the  State,  and  execute  legal  trusts  in  re- 
gard to  same;  to  execute  or  guarantee  any  bonds  required  to  Ih^  given  in 
proceedings  in  law  or  equity  in  the  courts  of  the  State,  but  no  such  l>ond 
shall  exceed  one-half  the  jiaid-up  capital  of  the  company;  to  act  as 
agent  for  the  investment  of  money  for  other  persons,  and  as  registrar  or 
transfer  agent;  to  execute  trusts  for  married  women  in  respect  to  their 
separate  property,  real  or  personal,  and  as  agent  in  the  managt^ment  of 


92  TRUST    COMPANIES. 

same,  "and  generally  to  have  and  exercise  such  powers  as  are  usually 
had  and  exercised  by  trust  companies ;"  to  act  as  administrator,  receiver 
of  any  estate,  guardian  or  curator  of"  any  infant  or  insane  person  or 
his  estate;  to  conduct  fidelit}'  insurance  and  title  insurance  business;  to 
loan  money  on  real  estate  and  collateral  security;  to  issue  its  debentures- 
or  notes  and  to  pledge  its  mortgages  upon  real  estate  and  collateral  se- 
curities as  security  therefor;  to  buy  and  sell  Government,  State,  munici- 
pal and  other  bonds,  negotiable  and  non-negotiable  papers,  stocks  and 
other  investment  securities.  "In  all  other  respects  such  corporations  shall 
be  governed  by  the  laws  of  the  State  governing  banks,  and  subject  to- 
such  examinations  as  banks  are  now,  or  hereafter  may  be,  subjected  to 
by  the  laws  of  this  State."  Any  trust  company  now  existing  may  avail 
itself  of  this  act,  if  its  capital  be  such  as  required  hereby.  (Laws  of 
1903,  Act  135.     Laws  of  1907,  Act  208.) 

California, 

Trust  companies  are  organized  under  the  provisions  of  the  general 
incorporation  law.  Number  of  corporators  required,  three  or  more. 
(Civil  Code,  1906,  Paragraph  287).  Such  companies  are  regulated  and; 
governed  by  the  provisions  of  an  act  approved  April  6,  1891  (chapter 
264,  Laws  1891)  —  (as  since  amended).  Powers  specified,  to  act  as  ex- 
ecutor, administrator,  guardian  (of  estate  only,  not  of  person),  assignee, 
receiver,  depositary,  trustee.  In  these  capacities  their  compensation  shall 
not  exceed  that  allowed  to  natural  persons  for  like  services.  Courts  are 
authorized  to  make  these  appointments.  Courts  may  permit  persons 
holding  like  trusts  to  deposit  their  funds  with  a  trust  company,  and 
have  the  amount  of  their  bonds  reduced.  Such  corporation  shall  not  be 
required  to  give  bond  or  security  other  than  the  deposit  with  the  State, 
but  shall  be  responsible  for  funds  handled  same  as  a  natural  person. 
The  paid-in  capital  must  always  equal  at  least  ten  per  centum  of  the  total 
deposits  and  amount  due  creditors,  the  surplus  being  reckoned  as  a  part 
of  the  capital.  But  the  maximum  capital  required  by  this  provision  shall 
not  exceed  $1,000,000. 

A  trust  company  may  not  act  in  fiduciary  capacities  unless  it  has  a 
capital  of  at  least  $100,000,  of  which  .$100,000  is  paid  in  cash.  Interest 
must  be  paid  on  all  moneys  held  in  trust.  The  company  must  deposit 
with  the  Treasurer  of  the  State,  before  accepting  any  trust  above  men- 
tioned, or  deposits  of  trust  money,  the  sum  of  $100,000  in  bonds  of  the 
United  States,  the  State  of  California,  or  any  county,  city  or  school  dis- 
trict thereof,  or  in  first-lien  mortgages  on  improved  and  productive  real 
estate  in  the  State,  worth  at  least  twice  the  amovmt  loaned  thereon.  Such 
securities  shall  be  registered  in  the  name  of  the  Treasurer  of  the  State, 
and  may  be  exchanged  from  time  to  time.  The  company  shall  receive 
the  income  from  same,  so  long  as  it  is  solvent  and  conforms  to  the  law. 
If  the  paid-up  capital  of  the  company  exceeds  $250,000,  it  may  mort- 
gage any  improved  and  productive  real  estate  owned  by  it  to  the  State 
Treasurer,  and  have  same  counted  as  a  part  of  the  deposit. 


STATE    AND    TKP.UITORIAI.    LAWS.  93 

Trust  conipanit's  are  required  to  render  to  tlie  Bank  Commissioners, 
tit  their  call  at  least  three  times  a  year,  comph-te  reports  of  condition  as 
of  a  specified  past  day.  Special  reports  may  Ix-  called  for  by  the  Com- 
missioners. They  must  exaniin*^  each  company  at  least  once  a  year. 
Every  company  must  obtain  from  the  Commissioners  a  license  to  do 
business.  The  use  of  the  word  "trust"  in  titles  is  forbidden  to  other 
corporations.  Trust  companies  are  forl)iddfn  to  make  loans  upon  their 
own  stock,  or  to  purchase  same,  except  to  prevent  loss  upon  dt-bts  previ- 
ously contracted,  in  which  case  the  stock  must  Ix-  sold  within  six  months. 
The  reserve  required  is  twenty  per  centinn  of  demand  or  imnudiate  liabili- 
ties and  of  time  certificates  of  dejiosit,  if  the  company  is  located  in  a 
city  of  '20(),()()0  or  more  inhabitants;  or  fifteen  per  centum  if  ltK'at«"d 
elsewhere.  One-half  of  the  reserve  may  be  on  deposit  subject  to  call  in 
^ny  solvent  bank  or  trust  company. 

The  term  "trust  company"  ih  banly  nuntioiicd  in  the  statut<s;  tin- 
act  grantiuij  trust  powers  is  entitled  "An  act  authorizing  certain  corpora- 
tions to  act  as  executor  and  in  other  caj)acities,"  etc. 

Foreign  corporations,  to  do  business  in  the  State,  must  file  with  tin- 
Secretary  of  State  and  with  the  county  clerk  in  the  county  in  which  their 
principal  ofiice  in  the  State  is  located,  a  certified  co})y  of  their  articles 
of  incorporation  or  of  their  chartt-rs  or  of  the  statutes  under  which  they 
■were  created.  Such  companies  must  in  any  case  designate  some  person 
residing  in  the  State  upon  whom  process  may  be  served. 

(Civil  Code,  1906,  pp.  702,  sqq.  [This  is  the  Act  of  April  (5,  1891. 
.as  amended  1897,  124;  1903,  211;  190'>.  2.S2]  ;  Civil  Code,  190(),  para- 
graphs 287,  290^/0,  :>83b;  General  Laws  1906,  page  46,  Act  296  [This 
is  the  act  creating  the  Board  of  Bank  Commissioners,  passed  1903,  S65, 
amended  1905,  304];  Laws  190.'>.  clia]»ter  2".9;  I-aws  1907.  chapters  ;')(», 
■75,  302,  4r)3.) 

COLOKADO. 

Five  or  more  ))ersons  may  associate  for  incorporation  as  a  trust  com- 
pany. They  shall  execute  articles  of  incorporation  as  provided  in  section 
2,  chapter  19,  General  Statutes.  One  copy  of  these  articles  shall  l>e  filed 
with  the  Secretary  of  State,  and  one  with  the  recorder  of  deeds  in  the 
county  where  the  conijiany  is  to  do  business.  The  capital,  paid  in  full, 
in  cash,  must  be  at  least  $;)0.000  in  cities  of  the  second  class,  and  at 
least  $250,000  in  cities  of  the  first  class.  The  number  of  directors  must 
be  three  or  more.  Powers  specified,  to  act  as  fiscal  agent,  registrar  and 
transfer  agent;  to  receive  from  persons,  corporations  or  under  order  of 
court,  deposits  of  money,  securities  or  other  personal  property  in  trust 
or  for  investment  or  for  safe  keeping,  subject  to  withdrawal  on  demand 
or  on  time  certificates ;  to  hold  and  accumulate  same  or  pay  interest  there- 
on at  not  to  exceed  six  per  centum;  to  loan  on  real  or  personal  security:  to 
act  as  trustee  under  any  mortgage  or  deed  of  trust  or  \wnd.  "and  to  ac- 
cept and  execute  any  other  trust"  not  inconsistent  with  the  laws:  to  act 


94  TRUST    COMPANIES. 

under  order  of  court  as  guardian,  receiver  or  trustee  of  the  estate  of  any 
minor,  the  annual  income  of  which  is  not  less  than  $100,  and  to  act  as 
depositary  of  funds  paid  into  court;  to  accept  and  execute  any  legal 
trusts  regarding  the  handling  of  estates,  real  or  personal,  of  living  or 
deceased  persons,  confided  to  it  by  courts  of  record,  persons,  corporations 
or  otJier  authorit^^,  being  accountable  to  all  persons  in  interest  for  the 
faithful  discharge  of  such  trusts ;  to  take  and  execute  any  trusts  confided 
to  it  by  courts  of  record  and  hold  real  or  personal  property  in  connection 
with  such  trusts;  to  purchase,  invest  in  and  sell  stocks,  bills  of  exchange, 
notes,  bonds  and  mortgages  and  other  securities,  and  to  give  receipts, 
certificates,  bonds  or  obligations  for  same  or  for  moneys  borrowed; 
to  act  as  executor,  administrator,  trustee  under  will,  conservator  or 
committee  of  the  estate  of  lunatics,  idiots,  persons  of  unsound  mind 
and  habitual  drunkards — courts  being  authorized  to  make  such  appoint- 
ments ;  to  conduct  a  safe-deposit  business,  a  fidelity  insurance  business ; 
"provided,  that  nothing  herein  shall  authorize  trust  companies  to  engage 
in  the  business  of  banking  except,  in  the  event  of  being  expressly  author- 
ized, except  to  the  extent  herein  allowed  and  provided  for."  *  *  * 
"That  all  corporations  incorijorated  under  this  act  may  do  or  perform  all 
acts  and  exercise  all  powers  connected  with,  belonging  to  or  necessary 
for  the  full  and  complete  exercise  and  discharge  of  the  rights,  powers 
and  responsibilities  hereinbefore  granted,  and  all  provisions  of  this  act 
shall  be  liberally  construed  so  as  to  accomplish  the  purposes  and  objects 
hereby  proposed."  A  trust  company  may  hold  such  real  estate  as  is 
necessary  to  carry  on  its  business. 

Courts  appointing  the  company  to  trusts  may  make  such  orders  and 
require  such  accounts  as  they  might  if  the  company  were  a  natural  per- 
son. The  trustees  or  board  of  directors  have  discretionary  power  of  in- 
vesting trust  funds  in  the  stocks  or  bonds  of  the  United  States,  any  State, 
any  incorporated  city  or  county  of  the  State  duly  authorized,  "or  in  such 
real  or  personal  securities  as  they  may  deem  proper,  but  no  trust  com- 
pany shall  invest  in  the  stocks  or  bonds  of  any  private  incorporated  com- 
pany." No  loan  shall  be  made,  directly  or  indirectly,  to  any  trustee, 
director  or  other  officer  of  the  companj^,  and  no  loan  on  the  stock  of  the 
company.  Stockholders  are  subject  to  double  liability.  In  handling  court 
trusts  the  company  is  subject  to  the  same  responsibilities,  has  the  same 
powers,  and  shall  receive  the  same  compensation  as  individuals  holding 
similar  trusts,  except  as  herein  otherwise  provided.  Trust  funds  and  in- 
vestments must  be  kept  separate  from  the  assets  of  the  company  and  be 
so  designated  as  to  show  to  what  trust  they  belong.  Trust  companies  are 
under  the  supervision  of  the  State  Bank  Commissioner,  to  whom  they 
must  make  not  less  than  three  reports  a  year,  according  to  a  form  pre- 
scribed by  him.  The  reports  must  be  called  for  a  past  day,  the  days  se- 
lected to  be  the  same  as  those  named  by  the  Comptroller  of  the  Currency 
for  the  first,  third  and  fifth  calls  for  reports  of  National  Banks.  Special 
reports  may  be  called.     The  Commissioner  must  examine  each  company 


STATE    AND    TERRITORIAL    LAWS.  95 

twice  a  year  or  ofteiur.  The  use  of  the  words  "trust"  or  "trust  com- 
pany" in  titles  is  forbiddtn  txctpt  to  regularly  incorporatrd  trust  com- 
panies. 

(Mills  Annotated  Statutes  1901,  paragraphs  54i-5441,  incl.  Laws  of 
1907,  chapters  111  [H.  B.  16I]  138  and  140.  See  Revised  Statutes  1908, 
sections  296-314  incl.,  section  847,  sections  315-352  incl.) 

Connecticut. 

Trust  companies  arc  incorporated  by  special  act  of  the  Legislature. 
There  are  a  number  of  general  laws  regulating  the  business  of  such  cor- 
porations, most  of  them  applying  also  to  State  banks  and  Savings  banks. 
Trust  funds,  unless  it  is  otherwis*-  provided  in  the  instrument  creating 
the  trust,  may  be  invested  in  such  securities  as  Savings  banks  are  al- 
lowed to  invest  in.  Tliese  are  specified  in  great  detail,  and  include  United 
States  bonds,  certain  State  and  municipal  bonds,  loans  on  certain  col- 
lateral, notes  of  two  or  more  persons  resident  in  the  State,  stock  of 
banks  and  trust  companies  in  the  State  or  in  New  York  city  or  Boston, 
certain  railroad  bonds,  mortgages  on  real  estate  worth  at  least  double 
the  amount  loaned  and  situated  in  the  State  or  in  certain  specified  places, 
and  deposits  in  banks  or  trust  companies  in  the  State  or  in  New  York, 
Massachusetts  or  Rhode  Island.  Trust  companies  maintaining  savings 
departments  are  required  to  invest  the  deposits  of  such  department  sep- 
arately according  to  the  rules  for  investment  for  savings  banks;  such 
investments  being  exclusively  for  the  protection  of  savings  depositors 
until  their  claims  are  paid  in  full.  Such  deposits  are  also  treated  separ- 
ately for  purposes  of  taxation.  Notwithstanding  anything  in  their  char- 
ters to  the  contrary,  trust  companies  are  now  (1908)  expressly  forbidden 
to  issue,  sell  or  negotiate  their  own  bonds  or  mortgage  securities,  etc.,  as 
investments,  to  guarantee  same,  or  to  engage  in  any  form  of  insurance 
business;  except  that  a  company  actually  engaged  in  the  business  of  a 
title  insurance  and  guarantee  company  on  January  1,  1907,  may  con- 
tinue such  business. 

Trust  companies  may  receive  deposits  of  public  moneys  under  certain 
restrictions,  but  not  to  an  amount  from  one  official  of  more  than  thirty 
per  cent,  of  the  paid-up  capital,  surj)lus  and  ])rofits  of  the  company. 
They  must  maintain  a  reserve  fund  of  fifteen  per  centum  of  aggregate 
deposits,  of  which  not  less  than  four-fifteenths  nnist  be  in  legal  tender 
on  hand.  One-fifth  of  the  reserve  may  consist  of  certain  approved  rail- 
road bonds  and  the  rest  may  be  on  demand  deposit  with  specified  reserve 
agents.  Loans  may  not  be  made  on  the  stock  of  the  company.  Loans 
to  one  person,  firm  or  corporation  may  not  exceed  ten  per  centum  of  paid- 
in  capital,  surplus  and  profits,  except  that  on  collateral,  with  a  margin  of 
twenty  per  centum,  such  loans  may  not  exceed  twenty  per  centum  of  such 
capital,  surplus  and  profits.  Paper  endorsed  by  officers  or  clerks  of  the 
company  may  not  be  discounted.    Loans  to  parties  out  of  the  State  may 


96  TRUST    COMPANIES. 

not  be  made  until  the  loans  to  residents  amount  to  at  least  half  the 
capital.  Loans  to  directors  may  not  exceed  five  per  centum  of  capital,  sur- 
plus and  profits  to  any  one,  or  twenty  per  centum  to  all  together ;  but  these 
provisions  do  not  apply  to  loans  on  collateral  with  a  margin  of  twenty 
per  centum.  Such  loans  on  collateral  to  one  director  must  not  exceed  ten 
per  centum  of  capital,  surplus  and  profits.  The  use  of  the  word  "trust"  in 
signs  or  titles  is  forbidden  except  to  regularly  cTiartered  trust  companies. 
The  statutes  provide  in  detail  for  the  issuance  of  a  new  savings  pass-book 
when  the  old  one  is  lost. 

Trust  companies  are  under  the  supervision  of  the  Bank  Commission- 
ers, to  whom  they  must  render  at  least  five  reports  each  year,  setting 
forth  in  detail  such  information  as  said  commissioners  may  require.  They 
are  subject  to  examination  semi-annually  or  oftener,  the  Bank  Commis- 
sioners being  required  to  examine  each  department  of  such  companies. 
If  the  Treasurer  of  the  trust  company  is  also  Cashier  of  a  National 
bank,  examinations  must  be  made  at  the  same  time  as  the  National  bank 
examiner  examines  the  National  bank.  If  a  trust  company  does  a  surety 
business,  it  is  required  to  make  annual  reports  with  special  reference  to 
that  business. 

For  purposes  of  taxation,  trust  companies  must  file  statements  with 
the  tax  commissioner  annually  during  the  first  fifteen  days  of  October, 
showing  number  of  shares  of  stock,  their  market  value,  names  and  resi- 
dences of  stockholders  and  number  of  shares  owned  by  each.  In  the 
February  following,  the  company  must  pay  to  the  State  Treasurer  a 'tax 
of  one  per  centum  on  the  market  value  of  each  share,  less  the  amount  of 
taxes  paid  on  the  company's  real  estate  in  the  State,  which  is  assessed  in 
the  taxing  district  in  which  it  is  located. 

(Revised  Statutes,  1902,  sections  254,  1969,  3400,  3401,  3402,  3403, 
3404,  3411,  3416,  3428,  3429,  34.57,  3458,  etc.  Public  Acts,  1903,  chap- 
ters 167  and  204.  Public  Acts,  1905,  chapters  54,  204,  207,  231.  Public 
Acts,  1907,  chapters  85,  86,  130,  180.) 

Delawaue. 

Trust  companies  in  this  State  are  incorporated  by  special  act  of  the 
Legislature.  There  are  a  few  general  laws  regarding  such  corporations, 
most  of  them  applying  also  to  other  financial  corporations.  They  are 
under  the  supervision  of  the  Insurance  Commissioner,  to  whom  they 
must  render  not  less  than  two  reports  each  year,  according  to  the  form 
prescribed  by  him,  within  twenty  days  of  receipt  of  request  from  him  for 
such  report.  Such  report  must  be  published  once  in  a  local  newspaper. 
The  Commissioner  has  authority  to  examine  trust  companies  at  his  dis- 
cretion or  on  request  of  the  company.  If  unsafe  conditions  are  revealed, 
the  commissioner  may  take  temporary  charge,  and  report  to  the  Attorney- 
General,  who  shall  institute  proceedings.  If  a  trust  company  is  author- 
ized to  act  as  surety  or  guarantor,  it  must  lile  with  the  Insurance  Com- 


STATE    AND    TERRITORIAL    LAWS.  97 

missionor  a  copy  of  its  cliarter,  make  to  liiin  an  annual  statement  and 
pay  an  annual  license  fee  of  $100,  and  other  lesser  fees.  Courts  are 
authorized  to  appoint  trust  companies  to  offices  of  trust;  and  may  in  their 
discr<tioii  not  require  such  corporations  to  give  surety  on  lM>nds  jfiven  for 
faithful  performance  of  duty;  but  the  capital,  surplus  and  jjroperty  of 
the  company  shall  be  liable.  All  liabilities  and  obligations  arising  out  of 
3.Tiy  sucli  trusts  are  "made  liens  upon  its  real  estate  prior  and  paramount 
to  any  other  lien  or  iiieuinhrance  tin-  s.iid  corporation  niav  create  or  suffer 
respecting  the  same." 

(Statutes,  Vol.  XXII,  chapter  .S.'U),  sections  1,  ii.  4,  :>,  7,  8,  9.  Laws 
of  1903,  chapter  .S30.) 

DiSTHKT    OF    C'OUMUI  \. 

Twenty-five  or  more  persons  may  incorporate  to  do  "a  safe-deposit, 
trust,  loan  and  mortgage  business."  They  shall  rile  an  organization  cer- 
tificate with  the  Commissioners  of  the  District.  Notice  of  intention  to  or- 
ganize nuist  be  printed  in  two  newspapers  in  the  District  at  least  four 
times  per  week  for  three  weeks.  The  charter,  when  granted,  must  be  filed 
with  the  recorder  of  deeds  for  the  District,  and  copies  of  both  the  or- 
ganization certificate  and  the  charter  must  be  filed  with  the  Comptroller 
of  the  Currency,  under  whose  supervision  trust  companies  operate.  The 
Comptroller  has  over  trust  companies  the  same  visitorial  and  examination 
powers  that  he  has  over  National  banks,  and  trust  companies  must  report 
to  him  ;is  the  National  banks  do.  They  may  not  begin  business  until  the 
capital  stock  is  paid  in  full  and  the  deposit  of  securities  with  the 
Comptroller,  hereafter  described,  is  made.  Powers  specified,  to  make 
contracts;  to  sue  and  be  sued,  implead  and  be  impleaded  in  any  court  as 
fully  as  natural  persons ;  to  make  and  use  a  common  seal ;  to  loan  money ; 
"to  accept  and  execute  trusts  of  any  and  every  description  which  may  be 
connnitted  or  transferred  to  them";  to  act  as  a  receiver,  assignee,  ex- 
ecutor, administrator,  guardian  of  the  estates  of  minors  with  the  consent 
of  the  guardian  of  the  person  of  such  minor,  and  committee  of  the  es- 
tates of  lunatics  and  idiots;  to  accept  deposits  of  money  for  the  purposes 
herein  designated;  to  act  as  fiscal  and  transfer  agent  and  registrar;  to 
issue  its  debenture  bonds  upon  deeds  of  trust  or  mortgages  of  r«-al  estate 
under  conditions  specified.  The  courts  of  the  District  are  authorized  to 
a|)point  trust  coni|)anies  to  act  in  fiduciary  capacities.  The  capital  stock, 
all  property  of  the  company  and  the  liability  of  stockholders  and  officers 
are  to  be  considered  as  the  security  requirtd  by  law  for  the  faithful  per- 
formance of  duties,  and  are  absolutely  liable  in  case  of  default.  Trust 
com})anies  must  also  make  a  deposit  with  the  Comptroller  of  the  Cur- 
rency, in  trust,  either  in  money  or  in  bonds,  mortgages,  deed  of  trust  or 
other  securities  equal  in  actual  value  to  one-fourth  of  the  capital  stock 
paid  in.  The  Comptroller  may  from  time  to  time  require  an  additional 
deposit  not  exceeding  in  value  one-half  the  paid-in  capital  stock.  The 
•company  may  hold   real  estate  not  exceeding   in   value  5^.')00,000.  and  in 


98  TRUST    COMPANIES. 

addition  such  as  it  may  acquire  in  satisfaction  of  debts.  But  real  estate 
acquired  under  foreclosure  or  to  secure  debts  may  noi  be  held  longer  than 
five  j'cars.  Charters  of  such  corporations  may  be  made  perpetual,  or  may 
be  limited  in  time,  subject  to  the  approval  of  Congress.  The  capital 
must  be  at  least  one  million  dollars,  half  paid  in,  and  all  paid  within  one 
year.  Taxes  of  one  and  one-half  per  centum  per  annum  must  be  paid,  in 
lieu  of  personal  taxes.  Stockholders  are  subject  to  double  liability.  The 
number  of  directors  must  be  not  less  than  nine  nor  more  than  thirty ;  all 
of  them  must  be  stockholders,  and  at  least  half  of  them  citizens  and 
residents  of  the  District.  The  District  Supreme  Court  has  jurisdiction 
over  trust  companies  in  the  requirement  of  statements,  examinations, 
making  of  orders  regarding  trusts,  etc.  Similar  corporations  already  or- 
ganized maj^  acquire  the  privileges  of  this  act,  and  all  such  are  subject 
to  its  provisions.  Congress  reserves  the  right  to  alter,  amend  or  repeal 
the  act.  Trust  companies,  in  common  with  all  other  banking  institutions 
in  the  District,  are  required  to  make  the  same  reports  to  the  Comptroller 
of  the  Currency  that  National  banks  are  required  to  make.  These  re- 
ports must  be  published  in  two  or  more  daily  papers  of  Washington,  one 
of  which  must  be  a  morning  newspaper.  The  Comptroller  may  examine 
such  companies  at  his  discretion,  or  may  take  possession  of  them  for  the 
same  reasons  and  in  the  same  manner  as  in  the  case  of  National  banks. 

(Code  of  the  District,  sections  71.'>-748.  Act  approved  June  25, 
1906.  Included  as  sections  186-^220,  and  section  224,  in  National  Bank 
Act,  edition  1907.) 

Florida. 

There  are  no  statutes  regarding  trust  companies.  Three  or  more  per- 
sons may  incorporate  "for  the  transaction  of  any  lawful  business  of  a 
public  or  private  character."  (Revised  Statutes,  chapter  2,  article  1,  sec. 
2122.)  But  banking  corporations  must  have  five  or  more  incorporators, 
(section  2l65).  Foreign  corporations  may  do  business  upon  complying 
with  certain  provisions  detailed  in  an  act  approved  June  1,  1907.  Chap- 
ter 4671  of  Laws,  approved  June  1,  1899,  authorizes  solvent  guarantee 
companies,  surety  companies,  fidelity  insurance  companies  and  fidelity 
deposit  companies  to  become  surety  upon  the  bonds  of  city,  county  and 
State  officers. 

Georgia. 

Five  or  more  persons  may  incorporate  a  trust  company.  They  must 
tile  articles  of  incorporation  with  the  Secretary  of  State.  Before  the 
filing  of  such  articles,  notice  of  intention  to  organize  must  be  published 
once  a  week  for  at  least  four  weeks  in  a  local  newspaper.  Powers  speci- 
fied, those  of  ordinary  corporations,  and  in  addition,  to  act  as  fiscal  and 
transfer  agent  and  registrar;  to  receive  deposits  of  moneys,  securities  and 
other  personal  property  and  to  loan  money  on  real  or  personal  securities? 
to  hold  real  estate  such  as  is  needed  for  the  purposes  of  the  corporation 


STATE    AM)    THKRiroiIIAI.    LAWS.  99 

and  such  as  is  acciuind  in  scttl.nunt  of  dtlts  dur  to  it;  to  act  as  trustee 
under  mortgages  and  bonds,  and  to  accept  and  execute  any  other  nuini- 
ci))al  or  corporate  trust  not  inc<)nsist«nt  with  law;  to  execute  trusts  for 
married  women  in  respect  to  tlieir  s«  parate  property,  real  or  personal, 
and  to  act  as  agent  in  the  management  of  same;  to  act  under  appoint- 
ment of  court  as  guardian,  receiver  or  l<-ustee  ot  the  t  state  of  any  minor, 
the  annual  income  of  which  is  .flOO  or  more,  and  as  depository  of  moneys 
paid  into  court;  to  receive  court  trusts  of  all  kinds;  to  receive  in  trust 
and  manage  property  of  all  kinds  committed  to  its  care  by  persons,  bodies 
politic  or  corporations;  to  purchase,  invest  in  and  sell  sttuks,  bills  of  ex- 
change, bonds  and  mortgages  and  to  issue-  tin  obligations  of  the  company 
for  moneys  or  securities  borrowed  or  received  on  deposit ;  to  act  us  ex- 
ecutor, administrator,  or  connnittec  of  the  estates  of  lunatics,  idiots,  per- 
sons of  unsound  mind  and  habitual  drunkards.  Capital  rcfjuired,  at 
least  $10(),()0()  paid  in,  and  not  to  exceed  .f'J.OOO.OOO,  divided  into  shares 
of  $100  each.  Tb.e  Board  of  Trustees  may  consist  of  not  l«-ss  than  five 
nor  more  than  fifteen  ))ersons.  Trust  companies  may  accjuire  and  exer- 
cise all  the  rights  and  privileges  and  be  subject  to  the  same  liabilities  and 
restrictions  as  banks  ujion  compliance  with  the  banking  laws.  .Savings 
banks,  trust,  security  or  guarantee  companies  already  organized  may  ac- 
quire the  powers  here  stated.  All  trust  companies  which  receive  de- 
posits arc  under  the  jurisdiction  of  tlu'  State  Bank  Examiner  and  are 
subject  to  the  same  laws  as  banks.  Tiiey  must  r«nder  at  least  four  re- 
))orts  each  year  to  the  Examiner.  uj)on  his  call.  .Such  reports  must  give 
full  statements  of  condition  according  io  a  pn  scribed  form  as  of  any 
I)ast  day  specified  by  the  Examiner,  and  nmst  be  published  in  a  local 
paper  within  ten  days.  The  Examiner  nmst  examine  «ach  company  twice 
a  year  or  oftcner.  The  companies  are  re(juired  to  k«ep  an  accurate  list 
of  the  names  and  addresses  of  stockholders,  and  to  send  such  lists  to  the 
Examiner  on  the  first  day  of  .July  of  each  year.  Checks  may  not  be  cer- 
tified unless  the  money  for  same  is  on  deposit,  and  such  checks  nmst  l>e 
charged  at  once. 

(Acts  of  1898,  |).  78.  SMi)|)lement  to  th.-  (  -mI.  .  ]<>o\,  sections  (ilj8- 
0K)().     Acts  of   1907,  No.  8L) 

Hawaii. 

Trust  companies  are  organized  under  the  general  laws,  their  p«)wers 
and  limitations  being  defim-d  by  special  acts  relating  to  such  corpora- 
ticns.  The  corporate  name  must  contain  the  word  "trust".  It  must  be 
organized  for  the  specific  purpose  of  doing  business  as  a  trust  company, 
and  such  objects  must  be  expressed  in  its  articles  of  association.  The 
capital  must  be  at  hast  .flOO.OOO.  fully  subscribed,  and  at  least  ."?.')(>,000 
must  bj  paid  in.  No  eorpc»ration  not  so  organized  may  act  in  fiduciary 
capacities  or  use  the  words  "trust"  or  "trustee"  in  its  corporate  name. 
Powers  specified,    in  addition  to  ordinary  corporate  powers:    To  receive 


100  TRUST    COMPANIES. 

and  hold  and  reconvey  and  dispose  of  any  propert}'^,  real  and  personal, 
which  may  be  committed  to  it  upon  any  trust  or  trusts  whatsoever,  from 
any  source,  including  married  women  and  minors,  individuals,  corpora- 
tions, courts ;  to  act  as  agents  or  attorneys  in  the  management  of  prop- 
erty; to  act  as  transfer  agent,  registrar,  agents  for  buying  and  selling 
securities,  managers  of  sinking  funds;  to  act  as  executor,  administrator, 
trustee,  receiver,  assignee,  guardian,  by  appointment  by  will  or  by 
court;  to  loan  money  upon  real  or  collateral  security;  to  issue  notes  and 
debentures  and  to  pledge  mortgages  and  other  securities  as  collateral 
therefor;  to  do  a  safe  deposit  business;  to  hold  such  personal  estate  as 
is  necessary;  to  lease,  hold,  purchase  and  convey  real  estate  as  its  cor- 
porate propert}';  to  purchase,  hold  and  sell  stocks  and  bonds;  to  act  as 
agents  of  insurance  companies  and  security  companies;  to  do  a  general 
trust  and  security  business;  "to  transact  as  agents  any  other  business  or 
undertaking,  trust,  mercantile  or  otherwise  which  may  be  necessary,  use- 
ful or  conyenient  to  the  main  purpose  of  the  corporation".  But  "Nothing 
herein  contained  shall  be  construed  as  giving  the  right  to  issue  bills  to 
circulate  as  money  or  to  discount  commercial  paper,  or  to  do  a  general 
banking  business,  or  to  do  a  savings  bank  business." 

Any  Circuit  Judge  may  require  of  any  trust  company  which  has  been 
appointed  to  act  in  any  fiduciary  capacity  bj'  Hawaiian  courts,  a  bond 
in  an  amount  not  exceeding  .$r)0,000,  conditioned  for  the  faithful  per- 
formance of  duties  arising  from  any  such  fiduciary  appointment;  and 
no  further  bond  shall  be  required,  unless  the  value  of  a  single  estate  un- 
der its  management  is  more  than  $50,000.  Investment  of  trust  funds  are 
at  the  company's  risk,  unless  they  are  such  as  the  courts  recognize  as 
proper  when  made  by  an  individual  acting  in  like  fiduciary  capacity  or 
are  permitted  by  the  instrument  creating  the  trust. 

Trust  companies  are  under  the  supervision  of  the  Treasurer  or  the 
Auditor  of  the  Territory.  They  must  render  and  publish  statements  in 
January  and  July  of  each  year,  according  to  a  schedule  prescribed  in 
the  statute.  The  Treasurer  of  the  Territory  may  at  any  time  and  in  his 
discretion  deputize  a  competent  person  to  examine  any  trust  company; 
and  must  have  such  examination  made  at  any  time  upon  written  request 
of  six  stockholders  or  depositors,  provided  they  deposit  funds  to  cover 
the  cost  of  the  examination. 

(Laws  of  1905,  Acts  68  and  69;  Laws  of  1907,  Act  76.) 

Idaho. 

Trust  companies  are  organized  under  the  provisions  of  the  general 
incorporation  laws.  Five  or  more  persons  may  incorporate.  They  must  file 
articles  of  incorporation.  The  number  of  directors  shall  be  not  less  than 
five,  and  each  must  own  at  least  $500.00  par  value  of  stock.  Stock- 
holders have  the  right  of  cumulative  voting.  Trust  companies  are  gov- 
erned by  the  provisions  of  chapter  92  of  the  Laws,  as  amended,  which 


STATE    AND    TERRITORIAL    LAWS.  101 

relates  to  "trust,  guarantee  title,  abstraet  and  saftty  deposit  eompanits." 
Powers  specified,  to  do  a  title  insurance  business;  to  receive  on  deposit 
and  in  trust  estates,  both  real  and  personal,  and  nianaj^e  same;  to  act  as 
trustee,  assignee,  receiver,  guardian,  extcutor,  administrator  and  to  ac- 
cept and  execute  "trusts  of  every  description  not  inconsist<nt  with  the 
laws";  to  receive  deposits  of  moneys  and  other  personal  proptrty  and 
issue  its  obligations  therefor;  to  invest  its  funds  in  and  to  purehqs*.-  -eal 
and  personal  securities  and  to  loan  money  on  sajpcV^V  ar.-t  as  tt-in\  and 
transfer  agent  and  registrar;  to  manage  sink;ng  funds;  to  hpid  an!  dis- 
pose of  in  any  way  it  sees  fit  all  such  real  property  t-y.  may  V*^  the  sulje"* 
of  insurance  by  the  eomi)auy;  to  jjurehase  and  sell  real  <state  and  take 
charge  of  same;  to  become  security  for  the  payment  of  damages  as- 
sessed to  be  paid  for  lands  taken  in  the  building  of  a  railway,  for  the 
opening  of  streets  or  roads,  or  for  any  purposes  where  land  or  property 
ifc  authorized  by  law  to  be  taken ;  to  iHconic  security  upon  any  writ  of 
error  or  appeal,  or  in  any  proceeding  instituted  in  any  court  in  the 
State;  to  receive  on  deposit  for  safe  kte{)ing  securities  undtr  the  control 
of  executors,  administrators,  tte. ;  to  rteeivc  deposits  of  court  funds;  to 
do  a  regular  banking  business. 

The  capital  required  for  trust  eomj)anit  s  since  lyOo  is  as  follows: 
In  villages  of  less  than  2()()()  inhabitants,  .fl  (),()()();  in  town*  of  from 
2000  to  3000,  $20,000;  in  towns  of  from  3000  to  .'jOOO.  !r''2.5.000;  in 
cities  of  from  5000  to  10,000.  $30,000;  in  cities  of  from  10.000  to  'i."),- 
000,  $50,000;  in  larger  places,  $100,000.  Companies  organized  prior  to 
1905  are  permitted  to  continue  with  the  former  required  capital.  $25,000. 
The  capital  is  liable  in  case  of  default  in  tlie  faitl)ful  discharge  of 
trusts,  and  is  to  be  taken  as  the  security  required  by  law.  Courts  making 
trust  ajipointments  may  examine  the  ottieers  of  the  company  regarding 
the  adnn'nistration  of  the  trusts.  Stockholders  are  subject  to  double 
liability.  The  tenure  of  real  estate  is  limited  much  like  that  of  national 
banks.  Before  declaring  dividends,  one-tenth  of  the  net  profits  must  be 
carried  to  surplus  until  it  equals  20  per  centum  of  the  capital.  Loans  to 
one  party,  except  secured  loans,  may  not  exceed  50  per  centum  of  the  cap- 
ital, surplus  and  undivided  j>rofits.  The  investments  permitted  inehide 
United  States  bonds;  munici})al  bonds  of  Idaho  and  of  other  States 
which  have  not  defaulted  on  interest  for  three'  ye-ars.  but  not  more  than 
50  per  centum  of  tlie  ass'-ts  may  be  invested  in  securities  of  any  one  State-, 
county  or  municijiality  outside  of  Idaho;  first  mortgages  upon  property 
worth  double  the  amount  loane-d  upon  theiu;  re-al  estate  witliin  specified 
limits;  eonunercial  paper  inider  certain  restrictions.  The  reserve  re'- 
quired  is  15  per  centum,  of  whieli  one-half  may  Im-  on  deposit  with  other 
banks  or  trust  companies. 

The  banking  dej)artme'nts  e)f  trust  companies  are  spe-eifieally  made- 
subject  to  the  regulations,  examinations  and  reports  required  of  all  bank- 
ing institutions.  They  are  under  the  supervision  of  the  State  Bank  Com- 
missioner, M-ho  must  e-xamine  them  at  least  once  a  year,  without  previous 


102  TRUST    COMPANIES. 

notice.    The  Commissioner  must  call  for  at  least  two  reports  a  year,  and 
may  call  for  not  to  exceed  three  additional  reports. 

(Code  1901,  chapter  92,  sections  2.^532-2337;  sections  2086  sqq.; 
Session  Laws  1905,  No.  l67;  Session  Laws  1907,  S.  B.  93,  page  545.) 

,    ,  Illinois. 

Trust  coihpanies  *aVe  incorporated  under  the  general  incorporation 
IftV?,  tbtiti  jiegiilgfed  fey  .'the  provisions  of  the  trust  company  law.  If  they 
wish  to  do  both' a  banking  and  a  trust  business,  they  are  organized  as 
banks,  and  qualify  under  the  trust  company  law.  Powers  authorized, 
assignee  or  trustee  by  deed;  executor,  guardian  or  trustee  by  will;  trustee, 
assignee,  receiver,  guardian,  conservator,  executor  or  administrator  by 
appointment  of  court;  the  appointment  as  guardian  or  conservator  shall 
apply  to  the  estate  only,  and  not  to  the  person;  depository  for  persons 
holding  fiduciary  appointments.  Such  corporations  are  not  required  to 
give  bond  or  security,  but  are  responsible  for  investments  and  are  further 
liable  tlie  same  as  natural  persons  in  like  positions.  They  are  required  to 
pay  interest  on  all  trust  funds,  at  a  rate  fixed  by  contract  or  ordered  by 
the  court.  Their  compensation  may  not  exceed  that  allowed  to  natural 
persons  for  like  services.  Before  accepting  trust  appointments  or  de- 
posits, each  compan}^  located  in  a  city  of  100,000  or  more  inhabitants 
shall  deposit  with  the  Auditor  of  Public  Accounts  the  sum  of  $200,000, 
and  each  company  in  towns  or  cities  of  less  than  100,000  inhabitants 
shall  deposit  $50,000.  Said  deposits  are  for  the  benefit  of  creditors  of 
the  company,  and  shall  consist  of  bonds  of  the  United  States  or  muni- 
cipal bonds  of  this  State  or  first  mortgages  on  improved  and  productive 
leal  estate  located  in  this  State  and  worth  at  least  twice  the  amount  loaned 
thereon.  If  it  appears  to  the  Auditor  that  the  value  of  the  trust  property 
held  by  any  company  exceeds  ten  times  the  amount  of  its  deposit  with 
the  State,  he  must  require  such  company'  to  increase  its  deposit  to  $500,- 
000  if  located  in  a  city  of  over  100,000  inhabitants  or  to  $125,000  if  in 
a  smaller  city  or  town.  The  deposit  may  be  reduced  to  the  original 
amount  when  the  Auditor  is  satisfied  that  the  value  of  the  trust  property 
held  has  been  reduced  below  ten  times  the  amount  of  such  original  de- 
posit. Neither  the  deposits  nor  the  loans  of  such  a  company  shall  at  any 
time  exceed  ten  times  the  amount  of  its  paid-up  capital  and  surplus. 

Trust  companies  are  required  to  file  with  the  Auditor,  during  the 
month  of  January  of  each  year,  a  statement  of  condition  as  of  Decem- 
ber 31  preceding.  The  information  called  for  is  detailed  in  the  statute, 
and  is  very  full.  It  includes  a  list  and  brief  description  of  trusts  held. 
The  Auditor  may  at  his  discretion  call  for  additional  information,  and 
for  additional  reports  at  any  time.  The  Auditor  must  make  an  examina- 
tion of  each  company  annually,  and  may  make  examinations  oftener  if 
he  thinks  best.  The  annual  statements,  in  condensed  form,  must  be  pub- 
lished by  the  Auditor  at  the  expense  of  the  companies,  once  a  week  for 


statp:  and  territorial  laws.  los 

three  consecutive  weeks  in  two  newspapers  of  general  circulation,  one 
printed  in  Springfield,  and  one  in  the  county  scit  of  the  county  in  which 
the  company  is  located. 

Trust  companies  which  do  a  hanking  business  are,  as  above  stated, 
organized  under  the  hanking  laws,  and  as  to  their  banking  departments 
are  subject  to  the  provisions  of  such  laws. 

(Starr  &  Curliss'  Annotated  Statutes,  18y(i,  chapttr  Si,  sections 
89-107.     Act  of  May  7.   1897.     Act  of  April  24,  1899.) 

Indiana. 

Ten  or  more  persons  may  incorporate  a  trust  company.  They  shall 
file  articles  of  association  with  the  Secretary  of  Slate.  The  amount  of 
capital  shall  be  at  least  $100,()()()  in  cities  of  ovt-r  .'»(),()()()  inhabitants;  at 
least  $")(),()00  in  cities  of  between  25,000  and  .')().()()()  inhabitants,  and  at 
least  $2"),000  in  cities  of  less  than  2a,()()0  inhabitants.  Maximum  limit, 
$2,000,000.  The  capital  must  be  divided  into  shares  of  $100  each. 
Where  it  does  not  exceed  -t  100,000  it  must  hv  fully  paid.  Stoi'kholders 
are  subject  to  double  liability.  The  directors  shall  numlwr  not  le.ss  than 
six.  Each  must  own  at  least  ten  shares  of  stock,  and  a  majority  must  be 
citizens  of  the  State.  Powers  specified,  to  hold  real  estatr  and  j>er.sonal 
property  such  as  is  necessary  for  the  convenient  transaction  of  its  busi- 
ness, for  the  use  and  occupation  of  officers  and  employees  and  for  the 
safe-keeping  of  its  assets,  deposits  and  j)roperty  held  in  trust,  and  such 
as  is  acquired  in  satisfaction  of  debts;  trust  property  may  be  invested  in 
real  estate  only  if  the  instrujnent  creating  the  trust  so  specifies;  to  hold 
real  or  personal  property  in  trust,  however  received  and  from  whatever 
source — whether  courts,  corporations  or  persons — upon  trusts  created  in 
accordance  with  the  laws  of  the  State  and  of  the  L'nited  States;  to  ex- 
ecute trusts  for  married  women  in  respect  to  their  separate  property, 
and  to  act  as  agent  in  the  management  of  such  property:  to  act  as  fiscal 
and  transfer  agent  and  registrar;  to  conduct  a  fidelity  insurance  busi- 
ness; to  act  as  depository  of  the  funds  in  charge  of  State,  municipal  or 
corporation  officials  or  other  officials  or  private  persons;  to  act  as  trustee, 
assignee,  receiver,  administrator,  executor,  guardian  of  the  person  or  es- 
tate of  minors,  guardian  of  the  estate  of  lunatics,  imbeciles,  spendthifts. 
habitual  drunkards  or  other  persons  disqualified  «)r  unable  to  managr 
their  estates;  courts  are  given  authority  to  make  such  appointments,  and 
no  bond  or  security  is  necessary  to  enable  a  trust  company  to  accept  such 
appointments;  to  act  as  general  agent  and  attorney  in  fact  for  public 
or  private  corporations  or  persons  in  the  management  of  real  estate  and 
personal  propertv;  to  receive,  undrr  specified  conditions,  trusts  rrsigned 
by  others;  to  receive  savings  deposits  under  the  same  regulations  regard- 
ing repayment  as  savings  banks;  to  invest  deposits  and  trust  funds  at  the 
discretion  of  the  directors  in  such  personal  securities  as  are  not  hereinaft<-r 
expresslv  prohibited,  but  special  directions  or  agreements  imposed  by  order 


104  TRUST    COMPANIES. 

of  court,  will,  contract,  etc.,  must  be  followed.  .Trust  companies  are  "for- 
bidden" to  "engage  in  any  banking,  mercantile,  manufacturing  or  other 
business,  except  such  as  is  hereby  expressly  authorized";  provided  that 
promissory  notes,  etc.,  made  negotiable  by  the  laws  of  the  State  when 
paj'able  at  a  bank  shall  also  be  negotiable  if  payable  at  a  trust  com- 
pany- They  shall  not  loan  to  directors,  officers,  agents,  or  employees,  or 
allow  them  to  become  indebted  to  the  company.  Interest  at  not  less  than 
three  per  centum  per  annum  shall  be  allowed  on  all  trust  funds  of  $100  or 
over  remaining  with  the  company  uninvested  for  over  six  months.  Such 
corporations  are  subject  to  the  orders  of  courts  committing  trusts  to 
them.  Annual  reports  must  be  rendered  to  the  Auditor  of  State,  and 
the  same  must  be  published  in  a  local  newspaper.  Corporations  not  or- 
ganized under  the  provisions  of  this  act  are  forbidden  to  use  the  word 
"trust"  in  their  titles.  Sliares  of  trust  company  stock  are  to  be  assessed 
in  the  town  or  city  where  they  are  located,  and  taxed  at  the  same  rate  as 
other  property  in  the  locality.  Such  companies  must  render  to  the  local 
assessor,  between  ISIarch  1  and  May  15  each  year,  a  statement  giving  the 
number  of  shares  and  estimated  cash  value  of  same,  less  real  estate  or 
other  tangible  property  at  its  assessed  value.  Foreign  companies  may 
operate  after  procuring  a  certificate  of  authority  from  the  Auditor  of 
State.  Before  such  certificate  is  issued,  certain  statements  and  informa- 
tion must  be  filed  with  the  Auditor,  who  must  satisfy  himself  of  the 
solvency  and  the  safety  of  the  company.  Such  corporation  must  deposit 
with  the  Auditor  securities  to  the  value  of  $25,000  to  remain  for  one 
year;  and  thereafter  must  keep  with  the  Auditor  securities  equal  in  value 
to  the  amount  of  its  liabilities  to  citizens  of  the  State.  If  the  company 
becomes  insolvent  or  fails  to  carrj'^  out  its  agreements,  the  Auditor  shall 
revoke  its  authority  to  do  business  in  the  State  and  apply  to  the  proper 
court  for  a  receiver  to  take  charge  of  the  deposit  above  mentioned.  Trust 
companies  are  under  the  supervision  of  the  Board  of  Bank  Examiners, 
who  work  under  the  direction  of  the  Auditor  of  State.  They  are  to  be 
examined,  thoroughly  "as  often  as  shall  be  necessary",  no  previous  notice 
of  the  proposed  examination  being  given.  The  fees  for  examination  are 
paid  by  the  companies  as  examined. 

(Acts  of  March  4,  1893,  p.  344,  Acts  of  1893;  March  6,  1899,  p.  503, 
Acts  of  1899;  March  7,  1901;  Feb.  24,  1899;  Feb.  27,  1899;  March  11, 
1901;  chapter  148,  Laws  of  1903;  Acts  of  1905,  p.  199;  Acts  of  1907, 
chapters  83,  182,  281.) 

Iowa. 

Trust  companies  are  organized  under  the  general  incorporation  laws. 
There  is  very  little  legislation  regarding  such  companies.  Loan  and  trust 
companies  are  authorized  to  receive  time  deposits  and  issue  drafts  on 
their  depositories.  Such  companies,  organized  under  the  general  incor- 
poration laws,  which  were  engaged  in  the  banking  business  prior  to  Jan- 
uary  1,   1886,  and  have  continued  therein   since  that  date,  may  become 


STATE    AND    TERRITORIAT.    LAWS.  105 

State  banks.  Trust  companies  are  specifically  uiade  subject  to  the  con- 
trol of  the  State  Bank  Examiners,  who  are  appointed  by  the  Auditor  of 
State.  They  must  have  a  full-paid  capital  of  not  less  than  $10,000  in 
towns  of  less  than  lO.OOO  j)opulation.  and  not  less  than  !f'.')U,000  in  larger 
places.  The  bankinj;  law,  which  applies  to  trust  companies,  requires 
such  institutions  to  make  quarterly  reports  to  the  Auditor  of  State,  who 
also  has  power  to  examine  them  at  his  discretion.  The  stockholders  are 
subject  to  double  liability. 

(Code  189.'),  section  188<):  Laws  of  1904,  chapter  S.";;  Laws  of  1906, 
cliapter  81;   Laws  of   19<i7.  chapter  9'2.) 

K.\xs.\s. 

Trust  comp;inies  are  organized  under  the  |)rovisions  of  the  general 
corporation  laws,  but  governed  and  regulated  by  the  provisions  of  the 
trust  company  law.  Powers  specified,  to  receive  moneys  in  trust;  minors 
niav  control  their  deposits;  to  do  a  safe  dejjosit  business;  to  "accept  and 
execute  all  such  trusts  and  to  ))erform  all  such  duties  of  every  descrip- 
tion as  may  be  committed  to  them  by"  persons,  corj)orations  or  courts; 
to  hold  real  or  personal  proj)erty  in  trust :  to  execute  and  guarantee 
bonds  required  to  be  given  by  public  otticers  or  in  proceedings  in  the 
courts,  ])rovided  that  the  liability  so  incurred  shall  not  be  in  a  sum  ex- 
ceeding one-fourth  of  the  paid-up  capital;  10  per  centum  of  the  premiums 
must  be  set  aside  as  a  guaranty  fund,  specially  invest<d ;  to  act  as  agent 
for  the  investment  of  money;  to  act  as  transfer  agent  and  registrar,  as- 
signee, receiver,  trustee,  depository,  fiscal  agent,  bond  trustre;  "and 
generally  to  have  and  execute  such  powers  as  are  usually  had  and  e-x- 
ercised  by  trust  companies";  to  act  as  guardian  or  curator  of  any  inl'ant, 
insane  or  other  ])erson  subject  to  guardianship;  to  act  as  executor,  trus- 
tee under  will,  administrator:  to  conduct  a  fidelity  insurance  business  and 
a  title  insurance  business;  to  loan  money  on  real  or  personal  security;  to 
execute  and  issue  its  notes,  bonds  or  debentures  under  certain  restric- 
tions;-to  buy  and  sell  municipal  and  corporate  bonds  and  all  kinds  of 
stocks  and  securities;  provided,  that  it  shall  not  loan  money  upon  or 
purchase  its  own  stock  unless  to  jirevent  loss  upon  a  debt  previously  con- 
tracted, in  which  case  it  may  not  hold  such  stock  longer  than  six  months, 
ond  the  same  shall  not  be  included  in  asstts  for  longer  than  six  months; 
"to  receive  deposits  of  money  from  any  bank.  Savings  bank,  trust  com- 
pany or  from  any  public  officer  (»r  Ixiard  subject  to  check,  or  from  any 
person,  company,  corporati«)n  or  association  upon  time  certificates  of  de- 
posit"; to  buy  and  sell  foreign  and  domestic  exchange,  gold,  silver, 
foreign  coin  or  bullion;  provided,  that  the  total  investment  in  bank  stocks 
shall  not  exceed  one-fourth  tlie  paid-up  capital. 

Trust  companies  nnist  keep  a  reserve  of  twenty-five  per  centum  of  de- 
posits subject  to  check,  and  ten  per  centum  of  time  deposits,  subject  to 
the  same  rules  as  State  banks,  but  part  of  the  rcser\e  may  be  in  L'nited 
States  bonds  or  in  loans  secured  by  l/nited  States.  State  or  municipal 
bonds,  in  lieu  of  deposits  in  banks.     The  capital  must  be  not  less  than 


106  TRUST    COMPANIES. 

$100,000  nor  more  than  $1,000,000,  divided  into  shares  of  $100  each; 
20  per  centum  must  be  paid  in  before  beginning  business,  and  the 
balance  within  six  months.  The  name  of  any  such  company  must  com- 
mence with  the  word  "the",  and  end  with  the  words,  "trust  company". 
None  but  companies  complying  with  and  organized  under  the  trust  com- 
pany laws  may  use  the  word  "trust"  in  titles.  The  directors  may  be  from 
five  to  fifteen  in  number;  a  majority  of  them  must  be  residents  of  Kan- 
sas, and  each  must  own  not  less  than  $1,000  of  stock.  They  must  take  an 
oath  of  office.  Before  dividends  are  declared  ten  per  centum  of  the  net 
earnings  must  be  carried  to  surplus  fund  until  the  latter  equals  one-half 
of  the  capital.  The  company  may  own  real  estate  for  its  own  use,  and 
such  as  is  acquired  in  the  collection  of  debts,  but  the  total  amount  shall 
not  exceed  in  value  50  per  centum  of  the  capital  for  more  than  six 
months.  Trust  companies  are  under  the  supervision  of  the  Bank  Com- 
missioner, to  whom  the,v  must  make  four  reports  yearly,  and  are  subject 
to  examination  by  him  the  same  as  banks,  at  least  once  per  annum.  The 
banking  law  applies  to  them  regarding  impairment  of  capital  and  in- 
solvency. In  the  absence  of  special  provisions  in  this  act,  the  general 
corporation  act  shall  apply, 

(Laws  of  1901,  chapter  407;  I-aws  of  1903,  chapter  528;  Laws  of 
1907,  chapter  425.) 

Kentucky. 

Companies  may  be  incorporated  either  to  do  a  trust  business,  or  to  da 
both  a  banking  and  a  trust  business.  For  the  former,  seven  or  more  cor- 
porators are  required.  The  capital  must  be  not  less  than  $15,000  in 
counties  whose  population  is  from  25,000  to  40,000;  not  less  than  $100,- 
000  in  counties  of  from  40,000  to  100,000  population,  and  not  less  than 
$200,000  in  counties  having  a  larger  population;  provided,  that  in  coun- 
ties having  a  population  of  25,000  or  more,  trust  companies  may  be  or- 
ganized with  a  capital  of  $25,000  in  cities  of  the  fourth,  fifth  or  sixth 
class.  Fifty  per  centum  of  the  capital  must  be  paid  in,  and  the  balance 
within  one  year.  Copies  of  the  articles  of  incorporation  must  be  filed 
with  the  clerk  of  the  county,  and  with  the  Secretary  of  State.  Powers 
specified,  to  have  the  powers  usual  with  coi-porations ;  "to  exercise,  sub- 
ject to  law,  such  powers  as  may  be  necessary  to  carry  on  its  business"; 
to  act  as  guardian  of  infants,  executor,  administrator  or  curator  of  es- 
tates of  decedents,  "committee  of  persons  of  unsound  mind,  receiver  or 
trustee  for  persons  or  estates";  to  act  as  agent  or  attorney  for  the  man- 
agement of  estates,  the  collection  of  rents,  accounts,  etc.,  "and  demands 
of  every  character";  to  receive  on  deposit  or  for  safe-keeping,  gold, 
silver,  money  and  other  personal  property.  Such  corporations  are  for- 
bidden to  loan  on  their  own  stock,  and  to  purchase  same  except  to  pre- 
sent loss  on  a  debt  previously  contracted,  in  which  case  such  stock  shall 
not  be  held  longer  than  one  year.  No  person  shall  be  allowed  to  be- 
come indebted  to  the  company  in  a  sum  exceeding  ten  per  centum  of  the 


STATE    AND    TKi:  RITORFAI.    LAWS.  107 

paid-up  cn])ital  and  surplus,  except  that  on  good  eoll.iteral  or  mortgage 
security  tl>e  sum  may  be  increas«d  to  ^i()  per  centum.  If  the  Inirrower 
is  a  directcr  or  officer  of  the  company,  lie  sli.ill  not  he  permitted  to  Ik?- 
come  indebted  to  the  company  in  excess  of  ten  per  centum  of  paid  capital 
and  surplus,  uidess  the  excess  t)e  secured  by  mortgage  or  pledge  of  real 
or  personal  property  double  in  value  the  amoinit  of  such  excess.  When 
acting  in  trust  caj»aeities  whose  duties  are  regulated  by  law  or  .<iubji-ct 
to  the  control  of  courts,  trust  companies  shall  be  subject  to  tlu  same 
duties  and  responsibilities,  have  the  same  rights  and  powers,  and  nceive 
the  same  compensation  as  would  individuals  acting  in  like  capacities. 
But  upon  bonds  recpiired  to  be  executed  in  such  cases  the  capital  stock  of 
the  company  shall  be  taken  as  the  oiAy  .security  recpiired.  unless  the 
court  or  some  party  in  interest  demands  more.  A  trust  compauv  may 
hold  real  estate  needed  for  its  business,  and  for  a  period  not  longer  than 
five  years  such  real  estate  as  is  acquired  in  the  satisfaction  of  d«bts  due 
it.  It  may  hold,  operate,  and  manage  real  estate  for  others.  Such  com- 
panies are  forbidden  to  engage  in  banking,  or  to  buy  or  sell  bills  of 
exchange. 

Companies  may,  however,  as  above  stated.  Im-  incorporated  to  do 
"both  a  banking  business  and  a  trust  company  business."  Such  a 
corporation  must  have  a  paid  capital  of  at  least  $"»(),00()  before  cora- 
nicncing  business,  except  that  if  the  subscribed  capital  is  .tlOO.OOH  or 
over,  one-half  must  he  paid  before  commencing  business,  and  the  balance 
within  a  year.  One-half  of  such  capital  "shall  be  .securely  invested  for 
the  trust  business  of  the  corporation,  and  shall  at  all  times  be  kept 
^separate  and  distinct  fronj  its  other  assets,  and  shall  be  primarily  liable 
for  its  riduciary  obligations."  The  remainder  of  the  capital  may  be 
used  for  its  banking  business,  and  the  books  must  be  so  kept  as  to  at  all 
times  show  the  condition  of  its  banking  business  and  of  its  trust  busi- 
ness. The  banking  department  is  governed  by  the  banking  laws,  and 
the  trust  department  by  the  trust  company  laws.  Stockholders  are  sub- 
ject to  double  liability.  A  list  of  the  stockholders  and  officers  must  be 
filed  in  .January  of  each  year  with  the  Secretary  of  State.  The  capital 
and  funds  not  held  in  a  fiduciary  capacity  may  l>e  invested  at  the  dis- 
cretion of  tht  directors;  the  triist  funds,  under  order  of  court  or  as  pro- 
vided by  law  for  the  investment  of  other  trust  funds.  Trust  companies 
must  make  reports  and  be  subject  to  examinations  the  same  as  banks; 
i.  ('.,  reports  shall  be  m.idt  (inarterly.  and  each  alternate  report  shall  be 
published  in  a  newspaper  published  in  the  county,  if  any,  and  which  has 
the  largest  hotia  fide  circulation  in  the  comity. 

(Statutes,  l.QO.S,  5j^()()S-()n).  I  iws  of  1})()|.,  chapter  7S  I.iws  of 
1906,  chapters  -^^^J,   K)  and   1  Ki. 

Louisiana. 

Five  or  more  persons  may  incorporate  for  the  purpose  of  conducting 
a    savings,    safe    deposit    atid    trust    banking    business.      A   certificate    ot 


108  TRUST    COMPANIES. 

authority  must  be  obtained  from  the  State  Examiner  of  State  Banks, 
One-half  of  the  subscribed  capital  must  be  paid  in  before  commencing 
business,  and  the  balance  within  ninety  days.  Powers  specified,  to  have 
succession  for  a  period  specified  in  the  articles  of  incorporation,  not  to 
exceed  ninety-nine  years;  to  have  the  other  ordinary  powers  of  corpora- 
tions; to  hold  real  and  personal  property  needed  or  convenient  for  the 
purposes  of  the  association;  the  real  estate  that  may  be  held  is  limited 
to  such  as  is  necessary  for  the  proper  transaction  of  the  business  and 
such  as  is  acquired  in  satisfaction  of  debts,  but  the  latter  may  not  be  held 
more  than  ten  years;  to  accept  and  execute  "trusts  and  agencies  of  any 
and  every  description  which  may  be  committed  or  transferred  with  their 
consent  to  them  by  any  person  or  persons,  corporation,  board  or  body, 
public  or  private,"or  by  State  or  United  States  courts;  to  act  as 
executor,  administrator,  syndic,  receiver,  curator,  tutor,  trustee  or 
assignee,  "in  the  same  manner  and  to  the  same  extent  and  under  the 
same  conditions  that  natural  persons  may  be  so  appointed";  but  as 
curator  of  an  interdict  or  tutor  of  a  minor,  it  shall  have  charge  of  the 
estate  only,  not  of  the  person,  and  the  commissions  allowed  by  law  shall 
be  equally  divided  between  the  company  and  the  persons  having  charge 
of  the  person ;  to  act  as  depository  of  funds  held  by  persons  or  officers 
acting  as  fiduciaries;  to  do  a  banking  business. 

Regarding  the  trust  business  that  may  be  undertaken,  it  is  to  be 
noted  that  the  constitution  and  laws  of  the  State  prohibit  trusts,  as  they 
exist  elsewhere  under  the  common  law ;  and  the  trust  company  act  spe- 
cially provides  that  nothing  therein  "shall  be  construed  as  authorizing 
the  constitution  of  any  agency  or  trust  in  this  State  which  is  contrary  to 
the  public  policy  of  the  State  of  Louisiana,  or  which  seeks  to  place  the 
propert}'^  of  persons  or  estates  in  this  State  out  of  commerce,  in  con- 
travention of  the  laws  of  inheritance  of  this  State,  or  of  the  prohibitionsi 
therein  contained  against  f^^dei  commissa  and  substitutions." 

There  is  no  limit  specified  to  the  number  of  directors,  but  a  majority 
of  them  must  be  citizens  of  the  State.  The  capital  of  the  company, 
where  it  acts  in  fiduciary  capacities,  is  to  be  taken  as  the  security  re- 
quired by  law  for  the  faithful  performance  of  duty;  but  the  court  may 
require  other  security.  Money  or  property  deposited  by  married  women 
or  minors  is  subject  to  their  control.  The  company  must  keep  a  reserve 
of  25  per  centum  of  its  demand  deposits.  Of  this  eight  per  centum 
must  be  on  the  premises  in  cash.  The  remainder  of  the  reserve  may 
consist  of  deposits  in  other  banks,  or  bills  of  exchange,  or  discounted 
paper  maturing  within  not  more  than  one  year,  or  in  State,  United  States 
or  municipal  bonds.     The  capital  must  be  at  least  $100,000. 

Such  companies  have  the  powers  and  are  subject  to  the  regulations 
and  liabilities  of  State  banks.  They  may  have  branches  within  the  limits 
of  the  municipality  or  parish.  Trust  funds  may  be  invested  in  United 
States  or  State  bonds,  county,  municipal  and  other  public  bonds  of 
Louisiana  and  other  States  that  are  quoted  at  or  above  par  and  have  not 


STATE    AND    TERRITORIAL    LAWS.  K..0 

dcfault.cl  in  intrrtst  tor  two  ytars;  stocks  of  railroads,  canals  and  other 
quasi-public  corporations  quoted  at  or  above  par  and  liaving  paid  interest 
at  not  less  than  four  per  centmn  lor  rive  years;  (»r  in  rirst  mortgages  on  real 
estate  apj)raised  at  double  the  amount  of  the  loan  and  said  mortgages 
runninj;  not  longer  than  ten  years.  Trust  funds  or  pn>perty  must  not 
be  included  in  the  published  assets  of  tin-  company.  Reports  as  of  n 
si>eciried  past  day  must  bt  made,  on  call  of  the  State  Examiner,  four 
times  a  year,  and  must  be  publish,  d  in  a  local  paper.  Examinations  are 
made  by  the  same  official,  .it  his  discretion  or  on  order  of  the  Governor 
or  the  Courts.  Loans  to  any  one  borrower,  except  loans  on  "good 
collateral  or  solvent  endorsements,"  are  restricted  to  20  per  centum  of 
the  capital,  surplus  and  undivided  profits.  No  loans  may  be  made  to 
officers  or  em))loyees,  unless  aj)proved  l)y  th«-  Directors  at  a  meeting  at 
which  tlie  api)Iicant  is  not  })r«sent.  Before  declaration  of  a  dividend, 
one-tenth  of  the  jjrorits  must  be  added  to  the  surplus  until  the  latter 
equals  '20  per  centum  of  the  capital.  Dividends  nuist  be  earned  during 
the  dividend  })eriod.  unless  the  undivided  j)rofits  are  enough  to  pav  the 
dividend  and  all  losses.  All  loans,  discounts,  ovirdrafts  and  other  debts 
])ast  due  more  than  twelve  months,  and  on  which  interest  has  not  Ix-en 
paid,  must  be  classed  as  bad  debts,  and  be  either  charged  off  or  reduced 
in  value  after  an  a])praisement  by  the  Bank  Examiner  and  two  stock- 
holders, before  a  dividend  is  declared. 

(Laws  of   LOO'i.  Act  No.  45.     Act   No.    179;   Laws    ipoL  Act   No.   10; 
Laws  190(),  Act  No.  IK);  Laws  of  1J>0H.  Acts  188.  '2."»1.  288.) 

Maink. 
L'ntil  late  in  the  year  19*^7.  trust  companies  in  this  .State  were  in- 
corporated only  by  special  acts  of  the  Legislature,  their  powers  In-ing 
derined  in  such  special  charters.  They  may  now  be  incorporated  under 
tfie  provisions  of  the  elaborate  trust  company  law,  approved  .March  21, 
1907.  The  number  of  corj)orators  required  is  rive  or  more.  The  powers 
speciried  are  to  receive  deposits  and  to  allow  interest  thereon ;  to  Uirrow 
money;  to  loan  money  on  credits  or  real  estate  or  personal  security,  and 
to  negotiate  loans  and  sales  for  others;  to  do  a  safe  depdsit  business;  to 
hold  and  enjoy  real  or  personal  or  mixed  property;  to  act  as  transfer 
agent  or  registrar;  to  execute  trusts  of  every  description  and  to  hold 
proj)erty  in  connection  therewith ;  to  act  as  assignee,  receiver,  executor, 
"and  no  surety  shall  be  necessary  upon  the  bond  of  the  corporation,  un- 
less the  court  or  officer  apjjroving  such  bond  shall  require  it";  "to  do  in 
general  all  the  business  that  may  lawfully  be  done  by  trust  aiul  banking 
C(.)mj)anies."  Capital  required,  $2;}.0()0  in  a  town  of  not  more  th.an  five 
thousand  inhabitants;  $;)0,()00  in  cities  of  from  five  to  ten  thousand 
inhabitants;  .i<7.").000  in  cities  of  from  ten  to  twenty  thousand  in- 
liabitants;  ij^l 00.000  in  cities  of  from  twenty  to  thirty  thousand  in- 
babitants;  .*1.")0.000  in  larger  cities.  The  shares  must  have  a  par  value 
of  .f  100  each.  No  stock  shall  be  issued  until  its  jiar  value  has  been  paid 
in  in  cash. 


no  TRUST    COMPANIES. 

The  number  of  directors  shall  be  at  least  five,  two-thirds  of  whom 
must  be  residents  of  the  State,  and  each  of  whom  shall  own  at  least  ten 
shares  of  stock.  The  stockholders  may  at  their  option  elect  from  the 
Board  of  Directors  an  Executive  Committee  of  not  less  tlian  five  mem- 
bers. The  Board  of  Directors  or  the  Executive  Committee  shall  con- 
stitute the  board  of  investment  of  the  company,  and  shall  keep  records 
of  all  loans  and  investments,  which  record  shall  be  submitted  to  the 
directors,  stockholders  and  bank  examiner. 

A  separate  trust  department  must  be  maintained,  and  all  trust  moneys 
and  property  be  kept  separate.  Persons  holding  fiduciary  appointments 
may  deposit  their  funds  or  securities  with  a  trust  company.  Loans  to 
one  person,  firm,  business  syndicate  or  corporation  may  not  exceed 
ten  per  centum  of  the  total  capital,  unimpaired  surplus  and  net  undivided 
profits,  "except  on  approval  of  a  majority  of  its  entire  investment  board, 
unless  secured  by  collateral,  nor  in  excess  of  25  per  centum  there- 
of, except  on  such  approval  and  secured  by  collateral  which  in  the 
judgment  of  said  majority  of  said  investment  board  shall  be  of  a  value 
equal  to  the  excess  of  said  loan  above  said  25  per  centum;"  pro- 
vided, that  in  determining  said  amount  every  name  appearing  on  any 
loan  as  endorser,  guarantor  or  surety  shall  be  regarded  as  an  original 
promissor.  Bona  fide  discounts  are  not  regarded  as  money  borrowed. 
In  all  cases  where  loans  in  excess  of  ten  per  centum  are  granted,  the 
records  must  show  who  voted  in  favor  thereof.  Loans  in  any  form  to 
officers,  directors  or  employees  may  be  made  only  after  approval  of  a 
majority  of  the  board  of  directors  or  executive  committee,  and  the  names 
of  those  voting  for  such  loans  shall  be  spread  upon  the  minutes.  The 
applicant  for  the  loan  or  anj'one  associated  or  connected  with  him  may 
not  be  regarded  as  voting  for  the  loan. 

Trust  companies  are  required  to  make  and  publish  reports  as  directed 
by  the  bank  examiner.  Annual  examinations  by  two  of  the  directors, 
under  the  direction  of  the  bank  examiner,  are  required.  Branches  may 
not  be  established  outside  the  city  or  town  in  which  the  company  is 
located,  without  special  warrant  from  the  bank  examiner,  and  in  any  event 
a  trust  company  may  not  establish  branches  outside  of  its  own  and  an  ad- 
joining county.  Every  director,  officer,  agent  or  emplo3'e  who  authorizes. 
or  assists  in  procuring,  granting  or  causing  the  granting  of  a  loan  in  vio- 
lation of  the  law  as  stated  above  relating  to  loans  to  directors  or  officers, 
every  director  who  votes  on  same,  and  every  director,  officer,  agent  or 
employee  who  wilfully  and  knowingly  pays  out  funds  or  permits  or 
causes  same  to  be  done  on  loans  in  violation  of  said  provisions,  "shall 
be  personally  responsible  for  the  payment  thereof,  and  shall  be  guilty 
of  a  misdemeanor". 

For  purposes  of  taxation,  trust  companies  are  required  to  make  re- 
turns to  the  State  assessors  semi-annually.  Money  deposited  in  trust 
companies  by  minors  or  married  women  is  subject  to  their  order.  Such 
corporations  are  forbidden  to  act  as  administrator  or  guardian,  anything 


STATE    AND    Tl'KUlTOUIAL    LAWS.  m 

in  their  charters  to  the  contrary  notwithstanding.  Thtv  must  keep  a 
reserve  of  15  per  centum  of  aggregate  deposits  payable  on  demand  or 
Avithin  ten  days.     The  stockholders  are  subject  to  double  liability. 

The  laws  of  this  State  relating  to  "trust  and  loan  associations"  do 
not  refer  to  trust  companies,  but  to  building  and  loan  associations. 

(Revised  Statutes,  chapter  4f);  Laws  188y,  chapter  31 '2;  Laws  1893, 
chapters  i^81  and  293:  Laws  189-'^,  chapter  48;  Laws  1897,  chapters  '218, 
247,  259;  Laws  1899,  chapter  (j8 ;  Laws  1901,  chapters  19(j,  286;  Laws 
1905,  chapter  171;  Laws  1907,  chapters  96,  119.) 

>L\RYLAXU. 

Trust  companies  in  this  State  are  incorporated  only  bv  special  act 
of  the  Legislature.  There  was  formerly  a  general  law  for  the  incorpora- 
tion of  such  companies,  which  was  repealed  in  1890.  (Chapter  272, 
Laws  of  1890.)  The  special  charters  define  the  powers  and  duties  of 
such  companies,  which  are  usually  quite  full.  The  only  general  laws  ap- 
plying to  trust  companies  now  are  those  designed  to  regulate  and  control 
same.  They  are  required  to  make  semi-annual  reports  as  of  June  30  and 
December  31,  to  the  Treasurer  of  the  State.  The  statutes  specify  the 
matters  to  be  covered  in  the  reports,  but  the  Treasurer  of  State  may  call 
for  additional  information,  and  for  additional  reports.  They  are  subject 
to  an  annual  examination  by  the  Treasurer  or  his  appointee,  the  items  to 
be  covered  in  the  examination  being  specified  by  the  statute.  If  a  com- 
pany be  found  unsafe,  the  Treasurer  shall  report  to  the  Attorney-Gen- 
eral, who  shall  institute  proceedings.  Trust  companies  are  required  to 
deposit  with  the  State  Treasurer,  to  be  held  by  him  in  trust  as  security 
for  creditors,  securities  equal  in  value  to  15  per  centum  of  the  })aid-up 
capital,  and  not  less  than  $30,000  in  amount.  Neither  the  deposits  nor 
the  loans  of  the  company  shall  be  allowed  to  exceed  ten  times  the  paid-up 
cipital  and  surplus,  "but  any  such  corporation  authorized  to  receive  court 
deposits  may  at  any  time  receive  on  deposit  and  loan  out  any  money 
which  may  be  deposited  with  it  by  order  of  any  of  the  courts  of  this 
State  notwithstanding  such  limitation."  The  stockholders  are  subject  to 
double  liability.  The  Treasurer  of  State  is  required  to  report  to  the 
General  Assembly  at  each  regular  session  the  condition  of  all  trust  com- 
panies. 

(Acts  of  1892,  chapters   109,  279;  Acts  of   IfJOS.  p.  Ml) 

>LASSACHrsETTS. 

Trust  companies,  which  in  this  State  were  formerly  incorporated 
only  by  special  act  of  the  Legislature,  may,  by  an  act  passed  in  >Liy, 
1904,  be  incorporated  under  the  general  law.  Fifteen  or  more  persons 
may  incorporate.  Notice  of  intention  to  organize  a  trust  company  must 
be  given   to   the   Board   of   Bank    Incorporation,  consisting  of  the    Bank 


112  TRUST    COMPANIES. 

Commissioner,  the  Treasurer  and  Receiver-General,  and  the  Commissioner 
of  Corporations,  and  must  be  published.  The  procedure  for  organization 
is  set  forth  at  length  in  the  statute.  No  shares  of  stock  shall  be  issued 
\intil  the  par  value  thereof  is  paid  in  full  in  cash.  The  amount  of  the 
capital  shall  not  be  less  than  $200,000,  nor  more  than  $1,000,000;  except 
that  in  cities  or  towns  of  a  population  not  greater  than  100,000  the  capital 
stock  may  be  not  less  than  $100,000,  divided  into  shares  of  $100  each. 
When  the  entire  capital  stock  is  paid  for  and  issued,  a  list  of  stockholders 
with  addresses  and  number  of  shares  held  must  be  filed  with  the  Board 
of  Bank  Incorporation,  who,  if  satisfied  that  the  law  has  been  complied 
with,  issue  a  certificate  authorizing  the  corporation  to  begin  business.  No 
corporation  not  duh^  authorized  may  advertise  business  as  a  trust  company. 
OlHcers  of  the  corporation  shall  be  sworn  to  the  faithful  performance  of 
their  duties.  Each  director  must  own  at  least  ten  shares  of  unpledged 
itock,  and  a  majority  of  them  must  be  citizens  and  residents  of  the 
Commonwealth  and  not  more  than  a  third  may  be  directors  in  any  other 
such  corjDoration.  The  books  of  the  company  must  at  all  reasonable 
times  be  open  to  the  inspection  of  stockholders  and  beneficiaries  under 
trusts.  Trust  companies  in  Boston  must  keep  a  reserve  of  20  per  centum 
of  aggregate  deposits  less  time  deposits  not  payable  within  thirty  days: 
trust  companies  elsewhere  in  the  State  must  keep  reserves  of  15  per 
centum.  Two-fifths  of  the  reserve  must  be  in  cash  on  hand.  The  re- 
mainder may  be  on  demand  deposit  with  Boston  trust  companies  duly 
authorized  as  reserve  agents,  or  with  National  banks  in  Massachusetts 
or  in  the  cities  of  New  York,  Philadelphia,  Chicago  or  Albany.  A  por- 
tion of  the  reserve  not  exceeding  one-fifth  may  consist  of  bonds  of  the 
United  States  or  of  Massachusetts:  provided,  that  the  aggre- 
gate cash  reserve  must  always  equal  five  per  centum  of  the  total  time 
and  demand  deposits,  exclusive  of  deposits  in  the  savings  department. 
Any  Boston  trust  company  may  be  authorized  by  the  Bank  Commissioner 
to  act  as  reserve  agent  for  other  trust  companies  in  the  state.  Such  re- 
serve agent  trust  companies  must  keep  one-half  of  their  reserves  in  cash, 
and  the  balance  may  be  on  demand  deposit  with  other  Boston  reserve 
agent  trust  companies  or  with  the  National  banks  above  described. 

Powers  specified,  to  receive  on  deposit,  storage  or  otherwise,  money. 
Government  securities,  stocks,  bonds,  coin,  jewelry,  plate,  vajluable 
papers  and  documents,  evidences  of  debt,  and  other  property  of  any 
kind;  to  collect  and  disburse  income  or  principal;  on  deposits  of  money 
so  received  it  shall  not  give  collateral  or  other  security;  to  advance  money 
on  credits  on  real  property  in  the  State  or  on  personal  security ;  to  invest 
in  stocks,  bonds  or  other  evidences  of  indebtedness  of  corporations ;  but 
*'no  trust  company  shall  advance  money  or  credits  upon  notes  secured  by 
deed  of  trust  or  by  mortgage  upon  farms  or  agricultural  or  unimproved 
land  outside  of  this  Commonwealth,  except  upon  land  situated  in  the 
New  England  States  or  the  State  of  New  York,  nor  invest  in  nor  make 
loans  upon  securities  of  a  company  negotiating  or  dealing  in  such  notes 


STATE    AND    TKRUITORl AL    LAWS.  113 

sc  secured  or  in  such  mortgages";  and  "no  trust  company  shall  as 
agent,  buy,  sell  or  negotiate  securities  or  evidences  of  debt  on  which  said 
company  may  not  lawfully  advance  money  or  credits,  nor  as  such  agent 
buy,  sell  or  negotiate  evidences  of  debts  secured  by  real  estate  under 
mortgage  or  deed  of  trust";  to  act  as  depository  of  court  and  trust 
funds;  if  court  funds  remain  unclaimed  for  a  prriod  of  more  than  ten 
years,  the  court  may  upon  motion  of  the  Attorney-General  order  same 
to  be  paid  to  the  Treasurer  and  Receiver-Gcn«ral  to  hold  for  the  owners; 
to  act  as  executor,  administrator,  receiver,  assignee,  guardian,  conservator 
or  trustee  "under  the  same  circumstances,  in  the  same  manner,  and  subject 
to  the  same  control  by  the  court  having  jurisdiction  of  the  same,  as  a 
legally  qualified  person";  any  such  api)ointment  as  guardian  shall  apply 
to  the  estate  and  not  to  the  person  of  the  ward;  to  act  as  transfer  agent, 
registrar,  fiscal  agent,  trustee  under  l)ond  issues.  Trust  funds  may  be 
invested  only  in  authorized  loans  of  the  United  States,  or  of  any  of  the 
New  England  States.  Illinois,  Iowa,  Michigan,  Minnesota  or  Wisconsin, 
or  the  cities  or  counties  thereof,  or  stocks  of  State  or  National  banks  or- 
ganized within  the  Commonwealth,  or  in  the  first  mortgage  bonds  of  a 
railroad  incorporated  in  any  of  the  New  England  States  and  whose 
road  is  located  wholly  or  in  part  in  the  same  and  which  has  earned  and 
paid  regular  dividends  on  all  its  stocks  for  two  years,  or  in  the  l)onds  of 
any  such  railroad  comi)any  unencumbered  by  mortgage,  or  in  first  mort- 
gages on  real  estate  in  this  Commonwealth,  or  in  any  securities  in  which 
Savings  banks  may  invest,  or  upon  notes  with  two  sureties  of  domestic 
manufacturing  corporations  or  of  individuals  with  a  sufficient  pledge  as 
collateral  of  any  of  the  aforesaid  securities;  but  real  estate  acquired  by 
foreclosure,  etc.,  shall  be  sold  at  public  auction  within  two  years. 

The  capital  and  liability  of  stockholders  shall  l>e  held  as  security  for 
the  faithful  performance  of  duties  in  trust  capacities,  and  no  surety 
shall  be  required  upon  bonds  filed  by  such  corporations,  except  that  the 
court  may  at  its  discretion,  upon  application  of  interested  parties,  re- 
quire additional  security  where  the  company  is  by  it  appointed  as  ex- 
ecutor, administrator,  receiver,  assignee,  or  guardian.  The  company  must 
be  governed  in  the  matter  of  investment  of  trust  funds  by  the  directions, 
if  any,  of  persons  creating  trusts.  A  trust  department  must  Ix"  main- 
tained for  the  purjwse  of  keej)ing  separate  the  trust  funds  and  property 
and  the  accounts  thereof.  If  savings  dcjwsits  are  received,  a  separate 
savings  dejjartment  must  l>e  maintained,  whose  assets  shall  N'  apj^ro- 
priated  solely  to  the  S'^curity  and  ])ayment  of  such  deposits,  the  accounts 
and  transactions  of  the  department  bt'ing  kept  separate.  Ninety  days* 
notice  may  be  required  for  withdrawals  in  this  department.  Trust  com- 
panies chartered  subsecjuent  to  May  '21.  18<)().  must  annually  set  apart 
ten  per  centum  of  net  earnings  to  a  guaranty  fund  until  same  equals  2'> 
per  centum  of  the  capital,  which  fund  shall  be  invested  in  the  same 
manner  as  deposits  in  Savings  banks  may  Ik-  invested.  \\'ith  companies 
S 


114  TRUST    COMPANIES. 

chartered  prior  to  that  date,  the  creation  of  such  guaranty  fund  seems  to 
be  optional,  but  the  fund  once  established  must  be  maintained  as  long  as 
trust  undertakings  remain  unfinished.  The  guaranty  fund  shall  be  ab- 
solutely pledged  for  the  faithful  performance  of  trust  duties,  and  trust 
creditors  have  in  addition  thereto  an  equal  claim  with  other  creditors 
upon  the  capital  and  other  property  of  the  corporation.  Stockholders 
are  subject  to  double  liability.  No  such  corporation  shall  loan  upon  its 
own  stock,  or  purchase  same,  except  to  prevent  loss  upon  a  debt  pre- 
viously contracted  in  good  faith,  in  which  case  the  stock  shall  within  six 
months  be  sold  at  public  or  private  sale.  The  total  loans  to  one  person 
or  firm  shall  not  exceed  one-fifth  of  the  paid  capital  and  surplus,  where 
the  capital  of  the  com.pany  is  $50,000,  or  over,  nor  one-fifth  of  the 
capital  of  companies  with  a  smaller  capital;  but  bona  fide  discounts  shall 
not  be  considered  as  money  borrowed.  Such  corporation  may  hold  real 
estate  unencumbered  by  mortgage,  for  its  use,  to  an  amount  not  exceed- 
ing 25  per  centum  of  its  paid  capital,  and  in  no  case  exceeding  $250,- 
000;  but  investments  legally  made  prior  to  April  18,  1894,  need  not  on 
this  account  be  changed.  Branch  offices  for  receipts  of  deposits,  payment 
of  checks  and  transacting  a  safe-deposit  business,  only,  to  be  conducted 
in  the  same  city  where  the  main  office  is  located,  but  not  elsewhere,  were 
formerly  permitted;  and  may  be  continued,  if  heretofore  authorized: 
but  after  January  1,  1909,  a  trust  company  may  be  authorized  to  have 
one  such  branch  only.  Reports  must  be  made  on  call  of  the  Bank  Com- 
missioner, not  exceeding  five  times  within  any  calendar  year,  giving  full 
information  detailed  in  the  statute.  For  purposes  of  taxation,  they 
render  an  annual  report  in  May.  Such  companies  are  subject  to  exami- 
nation by  the  commissioners  the  same  as  Savings  banks;  i.  e.,  annually 
and  whenever  the  commissioner  deems  it  wise.  The  stockholders  of  every 
trust  company  are  required  to  elect  each  year  an  examining  committee 
of  three  stockholders  who  are  not  members  of  the  executive  or  finance 
committees,  nor  the  president,  vice-president,  secretary  or  treasurer  of 
the  company.  At  least  once  a  3'ear,  without  previous  notice  to  the  officers 
or  directors,  this  committee  must  make  or  cause  to  be  made  a  thorough 
examination  of  the  company's  aifairs.  Within  ten  days  after  the  comple- 
tion of  the  examination  the  committee  must  report  to  the  bank  commis- 
sioner, giving  the  assets  and  liabilities,  including  those  of  the  trust  de- 
partment, and  such  other  information  as  the  commissioner  may  require. 
The  report  must  also  be  read  to  the  directors  and  to  the  stockholders  at 
their  next  meetings.  If  the  commissioner  thinks  it  necessary  after  re- 
ceipt of  the  report  he  may  require  a  special  examination  by  an  expert,  at 
the  company's  cost. 

(Revised  Laws,  chapter  II6,  including  amendments  to  1902;  Acts 
1902,  chapter  855;  Acts  1904,  chapters  200,  374;  Acts  1905,  chapters 
189,  228,  331;  Acts  1906,  chapter  204;  Acts  1907,  chapters  319,  320, 
417,  487.     Acts  19O8,  chapters  116,  520.) 


STATE    AND    TERRITORIAL    LAWS.  n:. 

Michigan, 

Sev(  n  or  more  ptrsons  may  iiuorporate  to  carry  on  a  "trust,  dejwsit 
and  security  business.  "  Articles  of  association  must  be  executtd  in 
triplicate  and  filed.  The  capital  must  be  at  least  $300,000  in  cities  of 
100,000  inhabitants  or  more,  and  at  least  .*I;JO,()00  in  smaller  places,  and 
may  not  exceed  .f. '5,000, 000;  .^O  per  centum  must  be  |)aid  in  at  the  stiirt 
and  the  balance  within  six  months.  Before  the  company  bej^ins  business, 
;":0  per  centum  of  the  capital,  but  not  more  than  .*'.iOO,000  in  amount,  in 
securities,  must  be  deposited  with  the  State  Treasurer.  The  number  of 
directors  must  be  seven  or  more,  and  each  must  own  at  hast  ten  shares 
of  stock.  Before  a  dividend  is  declared,  one-tenth  of  the  net  profits 
must  be  e;irried  to  surplus  fund,  until  it  ecuials  v»()  j>er  centum  of  the 
capital.  Powers  specified,  to  hold  real  and  personal  property  in  trust; 
to  execute  trusts  for  married  women  and  minors;  to  administer  court 
trusts;  to  act  as  agents  or  attorneys  for  the  transaction  of  business,  the 
management  of  estatis,  the  collection  of  inconie.  principal,  etc.;  to  act 
as  fiscal  agent,  transfer  agent  and  registrar;  to  act  as  executor,  admin- 
istrator, trustee,  receiver  or  assignee,  guardian  of  any  minor,  incompetent 
person,  lunatic,  or  any  person  subject  to  guardianshij),  courts  being  au- 
thorized to  make  such  appointments;  excejjt  in  the  discretion  of  the 
court,  trust  companies  acting  in  these  caj>acities  need  not  be  required  to 
give  security  other  than  the  deposit  with  the  Stat«-  Treasurer;  to  loan 
upon  real  and  collateral  security ;  to  issue  its  notes  and  debentures  pay- 
able at  a  future  date;  but  nothing  herein  contained  shall  be  construed  as 
giving  the  right  to  buy  and  sill  bank  exchange,  or  do  a  general  banking 
business;  to  do  a  safe-deposit  business;  to  become  sureties  in  cases  where, 
by  law  or  otherwise,  one  or  more  sureties  are  recjuired,  except  as  surety 
on  any  recognizance  for  criminals;  to  do  a  title  insurance  business.  Such 
companies  may  hold  real  estate  needed  for  the  transaction  of  business, 
including  with  the  business  office,  other  apartments  in  the  sanje  build- 
ing to  rent  as  a  source  of  income,  and  such  as  is  acquired  in  the  settle- 
ment of  debts;  but  the  latter  shall  not  be  reckoned  as  an  asset  for  longer 
than  five  years.  They  may  hold  real  estate  in  trust.  They  must  keep 
a  reserve  of  20  per  centum  of  "matured  obligations  and  money  due  and 
payable."  Qf  this  three-fourths  may  be  ke])t  in  any  bank  or  trust  com- 
pany approved  by  the  Conunissioner  of  th«-  Banking  Department.  The 
securities  to  be  deposited  with  the  State  Treasurer  shall  consist  of  lH>nds 
secured  by  mortgages,  or  notes  and  mortgages  on  unincumlHred  real 
estate  in  Michigan,  worth  double  the  amount  secured  thereby,  or  public 
stocks  and  bonds  of  the  L'nited  States,  of  Michigan,  or  of  any  State  of 
the  United  States  that  has  not  defaulted  on  principle  or  interest  for  ten 
years,  or  in  duly  authorized  issues  of  counti<-s,  townships,  school  districts 
and  munici]).-ilities  in  such  States.  The  directors  may  invest  the  balance 
of  the  capital,  and  moneys  received  in  trust,  in  the  same  securities.  "  or 
in   such   real   or    personal    securities    as    they    may   deem    proper."      The 


116  TRUST    COMPANIES. 

stockholders  are  subject  to  double  liability.  Reports  must  be  rendered 
quarterly  or  oftener,  at  the  call  of  the  Commissioner  of  the  Banking 
Department.  Such  reports  must  be  published  in  a  newspaper.  Reports 
must  be  made  within  ten  days  after  each  dividend,  giving  amount  of 
dividend,  amount  carried  to  surplus,  and  net  earnings  in  excess  thereof. 
Such  corporations  are  under  the  supervision  of  the  Commissioner,  and 
must  be  examined  by  him  annually  and  when  requested  by  the  directors. 
If  an  unsafe  condition  is  revealed,  the  Commissioner  and  the  Attorney- 
General  institute  proceedings  for  the  appointment  of  a  receiver.  The 
records  of  the  stockholders  must  be  open  to  inspection  by  directors,  offi- 
cers, stockholders  and  the  creditors  of  the  company.  Chapter  240,  Acts 
of  1907,  provide  for  "safety  and  collateral  deposit  companies",  having 
power  to  do  a  safe  deposit  business  and  certain  limited  trust  business. 

(Compiled  Laws  1897,  Chapter  l62,  §§6156-6189.  Acts  1897,  No. 
106.  Acts   1907,  No.  240.) 

Minnesota. 

Three  or  more  persons  may  incorporate  "annuity,  safe  deposit  and 
trust  companies."  The  name  adopted  must  be  such  as  to  be  not  readily 
confounded  with  that  of  an  existing  corporation;  and  corporations  not 
organized  under  the  trust  company  laws  are  forbidden  to  advertise  a  trust 
business.  The  capital  shall  be  not  less  than  $200,000,  and  not  more 
tlian  $2,000,000,  divided  into  shares  of  $100  each.  No  business  may  be 
transacted  until  at  least  $200,000  has  been  actually  paid  in,  in  cash,  and 
at  least  one-fourth  of  its  capital  has  been  invested  and  the  securities  so 
obtained  assigned  to  and  deposited  with  the  Treasurer  of  State.  The 
securities  in  which  this  deposit  may  be  invested  are  bonds  of  the  United 
States  or  of  any  State  therein,  bonds  of  the  cities  of  St.  Paul,  Minne- 
apolis, or  Duluth,  and  in  certain  other  municipal  bonds,  county,  school 
district  and  railroad  bonds  described  in  the  statute.  These  securities 
are  held  by  the  Treasurer  as  a  guaranty  fund  for  depositors  and  credit- 
ors and  for  the  faithful  discharge  of  duty.  Other  like  securities  may 
be  substituted  from  time  to  time.  The  income  of  same  goes  to  the  cor- 
poration making  the  deposit.  The  number  of  directors  of  such  a  cor- 
poration may  be  from  nine  to  twenty-seven;  a  majority  of  them  must  be 
citizens  of  the  State,  and  each  must  own  at  least  ten  shares  of  stock. 
Each  director  serves  three  years,  one-third  of  them  retiring  each  year. 
Directors  are  required  to  take  an  oath  of  office. 

The  powers  specified  for  such  corporations  are  the  ordinary  powers 
of  corporations,  and  in  addition,  to  hold  real  estate  necessary  for  the 
convenient  transaction  of  its  business,  and  such  as  is  acquired  by  fore- 
closure, etc. ;  but  no  investments  may  be  made  in  real  estate,  either  of  the 
funds  of  the  company  or  of  trust  funds,  unless  by  virtue  of  a  particular 
contract  with  the  maker  of  a  trust;  to  loan  on  mortgage  security;  "to 
purchase  notes,  bonds,  mortgages  and  other  evidences  of  indebtedness  and 
other  securities";  to  hold  real  or  personal  property  in  trust;  to  receive 


STATE    AND    TERRITORIAL    LAWS.  ij? 

trusts  from  courts,  from  public-  or  private  rorporatioiis  or  rn)in  p.rsons; 
to  execute  trusts  for  married  women  with  respect  to  th«  ir  separate 
estates;  to  act  as  fiscal  and  transfer  ajjent  and  registrar;  to  act  as 
depository  for  court  funds,  for  officers  and  for  persons  acting'  in  trust 
capacities;  to  act  as  trustee,  assignee,  receiver,  executor,  administrator, 
guardian  of  the  person  or  estate  of  minors,  guardian  of  the  estate  of  any 
lunatic,  imbecile,  spendthrift,  habitual  drunkard  or  otlur  person  unable 
to  manage  his  estate;  the  courts  are  authorized  to  make-  such  appoint- 
ments, and  no  bond  or  other  security  lueel  be-  recpiired  of  the-  corpe)rn- 
tion;  to  act  as  general  agent  and  attorney  in  fact  for  the-  management 
of  estates,  "and  generaliy  te)  act  for  and  re-pre-se-nt  ce)r])oratieins  or  per- 
sons under  powers  and  letters  of  attorney  in  all  respe-cts  as  a  natural 
person  could  do";  and  to  bece)me  sole  surety  upon  any  Umd  or  under- 
taking in  suits  or  special  proceedings  in  courts.  Persons  holding  tidii- 
ciary  ajipointments  may  resign  in  favor  of  a  trust  company.  Trust 
funds  of  -tlOO  or  o\er  must  be  in\ested  within  a  year  in  the-  same  kinds 
of  securities  as  the)se  specified  for  the  deposit  with  the  Treasurer  of 
State,  and  such  securities  must  be  allowed  by  the-  jirobate  court  in  settle- 
ments. Trust  funds  and  accounts  must  be  ke-pt  separate  from  other 
funds  and  accounts  of  the  corpe)ration ;  securities  purchased  with  trust 
funds  must  be  endorsed  to  the  company  as  trustee-,  etc.  Orders  of  courts 
or  agreements  regarding  the  investment  of  trust  funds  must  Ik-  fedlowe  d. 
"No  such  corjwration  shall  engage  in  any  banking,  me-rcantile,  manufac- 
turing or  other  business,  except  such  as  is  hereby  expressly  authori/e<l." 
No  loans  shall  be  made  to  directors,  i>ffice-rs  e)r  e-mjjloyees,  nor  shall  they 
be  allowed  to  be-come  indebted  to  the  corporatie)n  in  any  way ;  and  viola- 
tion of  this  is  made  the  crime  of  e-mbezzleme  nt.  Such  companie-s  are-  at 
all  times  subject  to  further  orders  from  the  courts  appeiinting  them  to 
trusts,  and  must  render  statements  to  such  cenirts  when  called  for.  They 
arc  subject  also  to  the  gene-ral  jurisdiction  of  the-  district  court  of  their 
county.  Tlit-y  must  render  statements  .-Minually  in  June  to  the  Public 
Examiner,  and  have  same  publisheel  in  a  newspaper,  with  a  list  of  sttx-k- 
holders,  and  give  additional  informatiein  when  called  for  by  the  Ex- 
aminer. The  Public  Examiner  nuist  examine-  every  such  company  each 
year  or  oftener.  If  he  finds  an  unsafe  ce)nditie»n,  he  may  take  charge-  at 
once  of  all  the  aff.iirs  and  jiroperty  of  the-  ce)mpany.  and  apply  to  the 
proper  court  for  a  receiver.  Such  companie-s  are  forbidden  to  make  an 
assignment,  but  must  notify  the  Examiner  instead.  Inautheirized  eem- 
cerns  may  not  use  the  word  "trust"  in  titles. 

(Revised  Laws,  1J)()"),  Chapter  .•)8,  !jJi.S().S.S-.S()17.  55'-i«  ^7  -lud  Js-J'/TS. 
Laws  of  190").  Chapter  H>.     Laws  of  1})(>7,  Chapte-r  '24->.) 

MiSSISSIPIM. 

Trust  ce)m)).-'ni<s  ar(  i-iiartereel  under  the-  general  laws  as  banks  with 
trust  company  powers.  Tiny  are  gove  rne-d  by  the-  same  laws  as  other 
banking  institutions,  "and  their  acts  shall  be-  subject  lo  the  same  restric- 


lis  TRUST    COMPANIES. 

tions  and  supervision  by  the  courts  as  the  acts  of  a  person  acting  in 
such  fiduciary  capacity."  The  capital  must  be  at  least  $100,000.  Pow- 
ers specified,  in  addition  to  ordinary  banking,  to  receive  and  execute 
trusts  of  every  description  received  from  persons,  corporations  or  by 
order  of  courts ;  to  hold  in  trust  real  or  personal  property  under  any  legal 
trusts ;  to  execute  or  guarantee  bonds  required  by  law ;  to  act  as  agent  for 
the  investment  of  money  or  the  management  of  property;  to  act  as  trans- 
fer agent,  registrar,  trustee  under  bond  issues;  to  act  as  guardian,  admin- 
istrator, executor ;  to  do  a  fidelity  insurance  business ;  to  act  as  agent  or 
attorney  in  fact  for  the  sale  of  real  or  personal  property;  to  accept  trust 
funds  or  other  property  upon  specially  agreed  terms,  but  may  not  charge, 
receive  or  pay  more  than  legal  interest;  to  loan  upon  real  or  collateral 
security;  to  act  as  assignee  or  receiver;  to  act  "in  any  other  fiduciary 
capacity  authorized  by  law." 

"Trust  companies  may  establish  n  special  mutual  loan  department  in 
which  the  expenses,  losses  and  profits  shall  be  kept  separate  from  all 
other  departments."  Separate  stockholders  may  be  received  for  such 
department,  who  may  borrow  from  the  company  and  fix  and  regulate 
the  manner  of  conducting  this  department.  "Shares  of  stock  may  be 
issued  to  such  borrowers,  to  be  paid  for  in  such  installments  as  may  be 
agreed  upon  or  fixed  by  the  by-laws."  Details  of  this  department  are 
further  outlined.     (Section  265.) 

Banks  and  trust  companies  must  make  at  least  four  reports  a  year 
to  the  Auditor  of  Public  Accounts,  at  his  call  without  previous  notice, 
according  to  forms  furnished  by  him.  which  form  must  call  for  resources 
and  liabilities,  amount  of  indebtedness  to  the  company  owing  by  owners, 
stockholders,  officers  and  directors.  The  reports  must  be  published  in 
local  newspapers.  Companies  having  on  deposit  money  or  other  effects 
belonging  to  a  deceased  depositor  must,  within  thirty  days  after  the 
qualification  of  the  executor  or  administrator  of  said  deceased  depositor, 
mail  to  the  executor  or  administrator  a  statement  of  the  amount  of  such 
deposit.  The  creation  of  branch  banks  or  offices  is  forbidden  after  Octo- 
ber, 19OG;  and  companies  then  operating  branches  are  required  to  set 
apart  and  maintain  $10,000  as  a  capital  for  each  branch. 

The  directors  are  required  to  hold  at  least  three  regular  meetings 
each  year  "for  the  purpose  of  making  a  full  and  careful  investigation 
and  inquiry  into  the  condition  and  affairs  of  the  bank,  and  particularly 
of  its  accounts  and  securities."  Accurate  records  of  these  meetings  must 
be  kept,  signed  by  all  directors  participating  therein.  The  word  "trust" 
must  form  part  of  the  title  of  every  trust  company,  and  no  institution 
not  authorized  by  its  charter  to  transact  the  business  of  a  trust  com- 
pany as  set  out  in  this  chapter  may  use  the  words  "trust"  or  "trust 
company"   in   its   title. 

(Code  1906,  Chapter  14,  sections  256-267;  Laws  19O8,  H.  B.  179, 
417.) 


STATE    AND    TERRITORIAL    LAWS.  119 

Missorni. 

Trust  conipHnies  may  be  incorporated  by  five  or  more  persons.  Arti- 
cles of  agreement  must  be  filed. 

Powers  specified,  to  receive  money  in  trust;  minors  may  control  their 
own  accounts;  to  do  a  safe  deposit  business;  to  execute  trusts  of  every 
description  for  persons  and  corporations;  to  execute  trusts  received  from 
courts;  to  act  as  assignee,  receiver,  trustee  and  depositary;  to  execute 
bonds  required  in  court  proceedings;  to  hold  real  or  personal  property  in 
trust;  to  act  as  agent  and  attorney  in  fact  for  persons  and  corporations 
in  the  management  of  property  and  for  the  investment  of  monev:  to  act 
as  transfer  agent  and  registrar;  to  execute  trusts  for  married  w»)m«t>  in 
respect  to  their  sejjarate  property,  and  to  act  as  agent  for  the  manage- 
ment of  such  property,  "and  generally  to  have  and  exercise  such  powers 
as  are  usually  had  and  exercised  by  trust  companies" ;  to  act  as  executor, 
administrator,  guardian  or  curator  of  any  infant,  insane  person,  idiot  or 
habitual  drunkard,  or  trustee  for  any  convict  in  the  jjenitentiary,  under 
the  appoin.tment  of  any  court  of  record  having  jurisdiction;  to  do  a 
fidelity  insurance  business;  to  do  a  title  insurance  business;  to  loan 
money  upon  real  estate  or  collateral  security,  and  to  execute  and  issue 
its  notes  and  delxMitures  payable  at  a  future  time,  and  to  pledge  its 
mortgages  on  real  estate  and  other  securities  as  security  therefor,  but 
such  notes  and  debentures  may  not  exceed  in  the  aggregate  ten  times  the 
paid-up  capital,  and  may  not  exceed  the  amount  of  first  mortgages 
pledged  to  secure  their  payment;  to  buy  and  sell  all  kinds  of  Govern- 
ment, State,  municipal  and  other  bonds,  and  all  kinds  of  negotiable  and 
non-negotiable  pajK-r,  stocks  and  other  investment  securities.  Trust  com- 
panies must  maintain  a  reserve  of  1;5  per  centum  of  demand  deposits, 
en  hand  or  on  deposit.  Deposits  on  which  the  company  has  the  right  to 
demand  twenty  days'  notice  are  not  to  be  considered  demand  dejM>sits. 

Before  a  dividend  is  declared,  one-tenth  of  the  earnings  must  U-  car- 
ried to  surplus  until  the  latter  equals  "iO  per  centum  of  the  capital. 

The  amount  of  cajjital  shall  be  not  less  than  $100,001).  and  not 
more  than  $10,000,000. 

The  number  of  directors  shall  be  not  less  than  five  nor  more  than 
twenty-five;  all  of  them  must  be  stockholders,  and  a  majority  of  them 
must  be  bona  fide  citizens  of  the  State.  If  the  number  of  directors  ex- 
ceeds five,  they  shall  be  divided  into  three  classes,  so  that  one-third  of  the 
number  shall  retire  each  year,  the  term  of  each  member  being  three  years. 
They  may  invest  moneys  })laced  in  their  charge  in  loans  secured  by  real 
estate  or  other  sufficient  collateral  security,  in  jiublic  bonds  of  the  L'nited 
States  or  of  this  State,  or  in  the  IxmuIs  or  stocks  of  any  incorporated 
city  or  county  in  this  State.  The  directors  must  meet  at  least  once  a 
month.  Their  written  records  must  show  the  aggregate  indebtedness  of 
each  director,  and  no  one  of  them  may  borrow  in  excess  of  10  per  centum 
of  the  capital  and  surplus  without  consent  of  a  majority  of  the  others. 


120  TRUST    COMPANIES. 

Loans  may  not  be  made  on  the  compaiiy's  own  stocky  except  to  pre- 
vent loss  on  debts  previously  contracted  in  good  faith,  in  which  case  the 
stock  must  be  sold  within  six  months.  A  trust  company  may  own  only 
such  real  estate  as  is  required  for  the  transaction  of  its  business,  and 
such  as  is  acquired  in  satisfaction  of  debts  due  it. 

Upon  making  with  the  Superintendent  of  the  Insurance  Department 
a  deposit  of  .$200,000,  consisting  of  cash.  Treasury  notes  of  the  United 
States,  or  Government,  State,  county,  municipal  or  other  bonds,  or  bonds, 
jiotes  or  debentures  secured  by  first  mortgages,  or  deeds  of  trust  or  mort- 
gages, or  deeds  of  trust  on  unencumbered  real  estate  in  the  State  of 
Missouri,  worth  at  least  double  the  amount  loaned  thereon,  or  such  other 
first-class  securities  as  the  said  Superintendent  may  approve,  and  upon 
satisfying  said  SuiJerintendent  of  its  solvency,  any  corporation  organized 
under  this  act  shall  be  permitted  to  qualify  as  guardian,  curator,  exec- 
utor, administrator,  assignee,  receiver,  trustee  by  appointment  of  court 
or  under  will,  or  depositar}'  of  money  in  court,  without  giving  bond  as 
such,  and  also  to  become  sole  guarantor  or  surety  upon  bonds  and  to  do 
fidelity  insurance  business.  Such  deposit  shall  be  primarily  liable  for 
obligations  of  the  company  due  to  fts  acting  in  the  capacities  named. 

Trust  companies  are  under  the  jurisdiction  of  the  State  Banking 
Department,  who  must  examine  each  company  at  least  once  a  year  and 
oftener  if  it  seems  expedient.  The  stockholders  are  also  required  to  ap- 
point a  committee  of  three  or  more  of  their  number  to  make  an  annual 
examination. 

(Annotated  Statutes,  IpOfi,  Chapter  12,  Article  XII,  sections  1424- 
1439;  Article  VIII,  sections  130.S-1311; — as  amended  by  Senate  Bill  No. 
143,  Acts  of  1907,  pages  134  sqq.,  approved  March  18,  1907.) 

Montana. 

Three  or  more  persons  may  incorporate  to  carry  on  a  "trust  deposit, 
security  and  loaning  business."  Articles  of  agreement  must  be  filed  with 
the  Secretary  of  State,  and  a  copy  with  the  county  recorder  of  deeds. 
The  term  of  existence  of  the  corporation  ma}'  not  exceed  fifty  years. 
The  capital  must  be  not  less  than  $100,000  nor  more  than  $10,000,000. 
The  number  of  directors  must  be  not  less  than  three  nor  more  than 
twenty-five;  all  must  be  stockholders,  and  a  majority  must  be  hona  fide 
citizens  of  the  State.  If  their  number  exceeds  five,  the  term  of  office  of 
each  shall  be  three  years,  and  one-third  shall  retire  each  year. 

Powers  specified,  to  receive  moneys  in  trust;  to  accept  and  execute 
trusts  of  every  description  committed  to  them  by  persons,  corporations 
or  by  order  of  courts;  to  hold  any  real  or  personal  estate  in  trust;  to 
execute  or  guarantee  any  bonds  required  to  be  given  in  proceedings  in 
law  or  equity;  to  act  as  agents  for  the  investment  of  money;  to  act  as 
transfer  agent  or  registrar;  to  execute  trusts  for  married  women  in  re- 
spect to  their  separate  property,  and  to  manage  same,  "and  generally  to 
have  and  exercise  such  powers  as  are  usually  had  and  exercised  by  trust 


STATE    AND    TKRIilTOHlAL    LAWS.  \2l 

companies";  to  act  as  trustee,  assignee,  ree«iver,  administrator,  exeeutor, 
guardian  of  the  pt  rson  and  estate  of  any  minor,  or  of  the  estate  of  any 
lunatic,  imbecile,  spendthrift,  habitual  drunkard  or  other  persons  unable 
to  manage  their  estates;  to  do  a  fidelity  insurance  business;  to  do  a  title 
insurance  business;  to  loan  money  upon  real  or  personal  security;  to 
itsue  its  notes  or  debentures  jjayable  at  ri  future  tinu-,  and  to  pledge  its 
mortgages  upon  real  estate  or  other  securitits  as  security  therefor;  to 
buy  and  sell  (lovernnient,  State,  county,  municipal  and  other  bonds,  and 
all  kinds  of  negotiable,  non-negotiable  and  counnereial  paper,  stocks  and 
other  investment  securities;  to  become  endorser  and  surety;  to  receive 
both  time  and  demand  dej)osits;  to  do  a  safe  deposit  business. 

The  directors  are  authorized  to  invest  the  capital  "in  good  securi- 
ties"; and  the  capital  and  funds  entrusted  to  the  company  may  be  in- 
vested in  notes  or  bonds  and  mortgages  on  unincumlH-red  real  «state  in 
the  State,  or  in  stocks  and  bonds  of  this  State  or  any  State  or  Territory 
of  the  United  States,  or  in  the  bonds  of  any  county,  city,  town  or  school 
district  of  this  State.  Such  cori)oration  may  own  only  such  real  «state 
as  is  required  for  the  transaction  of  its  business  and  such  as  is  accjuired 
in  the  settlement  of  debts  due  it. 

Loans  to  any  managing  officer  are  forbidden  exc«'pt  upon  good  col- 
lateral or  other  good  and  specific  security ;  and  where  such  a  loan  ex- 
ceeds 10  per  centum  of  the  capital  it  nnist  first  be  approved  by  a  m.:j«)rity 
of  the  Board  of  Directors  and  be  entered  with  their  signatures  upon  the 
minutes.  Loans  to  any  one  party, — bona  fide  discounts  excepted. — must 
not  exceed  20  per  centum  of  the  capital  and  surplus.  Stockholders  art 
subject  to  double  liability.  The  reserve  required  is  fifteen  per  e«ntum  of 
the  total  deposits,  "of  which  such  portion  as  the  B«>ard  of  Directors  may 
determine"  may  be  on  deposit  in  banks  in  cities  of  the  first  and  second 
classes  approved  by  the  State  Kxamin«T  as  reserve  banks.  The  reserve 
banks  are  required  to  maintain  a  reserve  of  -2'>  })er  centum,  which 
may  be  in  lawful  money  or  on  deposit  with  banks  subject  to  the  approval 
of  the  State  Examiner.  The  use  of  the  terms  "trust"  and  "trust  com- 
pany" in  titles  is  forbidden  except  to  regularly  organized  trust  com- 
panies. Foreign  companies  may  operate  in  the  State  under  conditions 
detailed  in  the  statutes.  The  Laws  of  190.').  page  '2 Hi,  provide  for  the 
organization  of  "Endowment  and  Investment  Corporations",  which  have 
some  of  the  powers  of  banks  and  of  trust  companies. 

The  State  Examiner  is  required  to  call  for  not  less  than  four  reports 
each  year  from  trust  companies,  at  intervals  of  not  less  than  two  calendar 
months;  the  reports  to  be  according  to  a  form  prescribed  by  him  and  to 
be  published  in  local  papers.  The  directors  are  authorized  to  «hclarc 
semi-annual  dividends;  and  reports  of  dividends  must  be  forwarded  to 
the  State  Examiner  within  ten  days  after  same  are  declared.  The  direc- 
tors are  personally  liable  for  violations  of  the  law. 

(Code  ISQr).  paragraphs  590-611.  Act  of  March  15.  l})t)l.  Laws  of 
1905,  Chapter  19-     Eaws  of  1907,  Chapters  137,  159,  l6J,  190.) 


122  TRUST    COMPANIES. 


Nebraska. 


This  State  has  no  statutes  relating  to  trust  companies.  Paragraph 
•2081  of  the  Compiled  Statutes  (chapter  l6,  section  123),  provides  that 
"any  number  of  persons  may  be  associated  and  incorporated  for  the 
transaction  of  any  lawful  business." 

Nev\i)A. 

This  State  has  no  statutes  relating  specifically  to  trust  companies. 
The  general  incorporation  laws  provide  (Laws  of  1903,  chapter  121) 
that  three  or  more  persons  may  incorporate  for  the  transaction  of  any 
lawful  business,  except  to  carry  on  within  the  State  an  insurance  busi- 
ness, or  that  of  a  siirety  company,  or  that  of  a  railroad  company  other 
than  a  street  railroad.  Such  a  corporation  has,  in  addition  to  certain 
•specified  and  ordinary  powers  of  corporations,  'the  powers  expresslj'^ 
g;iven  in  its  articles  or  certificate  under  which  it  was  incorporated." 
Chapter  119,  Statutes  of  1907,  creates  a  Board  of  Bank  Commissioners. 
Trust  companies  are  apparently  subject  to  the  control  of  this  Board  if 
ihey  do  a  banking  business,  but  are  not  mentioned  in  the  act. 

New  Hampshire. 

Trust  companies,  as  well  as  banks,  are  incorporated  only  by  special 
.act  of  the  Legislature.  The  powers  of  such  corporations  are  enumerated 
in  their  charters.  There  are  a  few  general  laws  regulating  the  business 
of  trust  companies.  For  purposes  of  taxation,  they  are  required  to  re- 
port to  the  State  Treasurer  annually,  on  or  before  May  1.  The  company 
must  pay  to  the  same  official  annually,  in  October,  a  tax  of  three-fourths 
of  one  per  centum  upon  the  amount  of  the  general  deposits  on  which  it 
pays  interest,  after  deducting  the  value  of  its  real  estate  and  the  value 
of  its  loans  secured  by  mortgage  on  real  estate  in  the  State  made  at  a 
rate  not  exceeding  five  per  centum  per  annum;  and  in  addition  a  tax  an- 
nually of  one  per  centum  upon  the  capital  stock,  less  the  value  of  all  real 
estate  owned  by  the  corporation  and  not  already  deducted  from  the 
amount  of  the  general  deposits  as  hereinbefore  provided.  Such  taxes 
nare  in  lieu  of  all  other  taxes  against  the  corporation,  their  stockholders 
and  their  depositors  on  account  of  their  interests  therein.  Trust  com- 
panies are  under  the  supervision  of  the  Bank  Commissioners,  who  are 
required  to  examine  them  annually,  or  oftener  when  so  directed  by  the 
Governor.  If  unsafe  conditions  are  revealed,  the  Bank  Commissioners 
may  apply  to  the  supreme  court  for  the  a^apointment  of  an  assignee  to 
iake  chjirge  of  the  institution.  Trust  companies- are  forbidden  to  make 
loans  to  officers  or  directors  except  b\'  the  unanimous  approval  of  the 
Itoard  of  directors  in  writing.  If  the  company  transacts  the  business  of 
a  Savings  bank,  such  business  must  be  conducted  in  a  separate  depart- 
■ment,  which  is  amenable   to  the  laws  governing  Savings  banks,  and  the 


STATF.    AND    TKIUUTOUIAL    LAWS.  123 

Treasurer  of  tiie  eomp-my  shall  (rhr  .i  Ik.irI  to  the  savings  department  in 
like  manner  as  is  refiuired  of  tiie  treasurers  of  savings  banks.  Trust 
companies  are  forbidden  to  eommenee  business  until  they  have  satisfied 
the  B.mk  Commissioners  that  their  eai)ital  has  Iwen  paid  in  in  accordance 
with  the  i)rovisions  of  their  ehart»rs.  The  nianaj{»inent  of  such  com- 
panies shall  consist  of  a  board  of  trustees  or  directors  elected  annually, 
who  must  be  sworn  to  the  faithful  diseharsfe  of  their  duties,  and  one  of 
whom  shall  be  elected  President  of  th«-  company.  Such  Iward  shall  elect 
an  investment  committee  of  not  less  than  time  of  its  menib«rs.  The 
board  must  meet  at  least  once  each  month,  and  receive  the  report  of  the 
investment  committee.  Each  director  must  lu-  the  absolute  owner  of  at 
least  ten  shares  of  stock:  or  of  at  least  five  shares  if  the  capital  stock 
does  not  exceed  $.")0,000.  A  trust  company  ujay  not  'hire"  money  or  give 
its  note  except  on  the  duly  recorded  vote  of  the  directors.  The  directors 
are  required  to  make  a  semi-annual  examination  of  the  company,  forward 
reports  of  such  examinations  to  the  Bank  Commissioners,  and  publish 
copies  of  same  in  a  local  newspaper.  I'or  the  record  of  loans  and  invest- 
ments, trust  companies  must  keep  n  separate  lH>ok,  M'ith  classifications  as 
required  by  the  Bank  Commissioners,  which  book  nuist  l>e  submitted  to 
llie  Commissioners  or  the  directors  at  each  examination.  The  Treasurer 
of  the  company  must  report  to  the  Bank  Commissioners  the  condition  of 
the  company  annually  as  of  the  last  business  day  of  June.  Officers  and 
employees  are  forbidden  to  receive  any  fee.  present  or  benefit  from  bor- 
icwers  as  an  inducement  to  make  loans.  Trust  couipanies  are  forbidden 
to  loan  to  one  person,  firm  or  corporation  an  amount  in  excess  of  ten 
per  centum  of  their  capital,  or  to  hold,  both  by  way  of  investment  and 
security  for  loans,  the  stock  and  bonds  of  any  corporation  to  an  amount 
in  excess  of  said  ten  per  centum,  or  to  make  loans  on  th«'ir  capital  stiH-k. 
(Laws  of  18.9"»,  chapters  90,  .02,  105  and  lOS;  Laws  of  1899,  chap- 
ter 1  i;  Public  Statutes,  chajiter  f)5,  i\-2,  and  ch.apters  l(r2.  \63  and  l65, 
passim.;  Laws  of  100"),  chapter  1*2.) 


New  Jkrsey. 

The  laws  of  this  State  rejjarding  triist  companies  were  carefully  re- 
vised in  1899.  •i"d  the  Trust  Company  Law  of  that  year  is  quite  elabo- 
rate. Seven  or  more  persons  "of  fidl  age"  may  incorporate  a  trust  com- 
pany. The  name  of  the  company  must  contain  the  word  "trust",  and  no 
company  incorporated  under  any  other  act  may  use  such  word  in  its  title. 
The  capital  must  be  at  least  $100,000  fully  paid,  divided  into  shares  of 
$100  each.  .More  than  one  class  of  stock  is  forbidden.  The  proceedings 
for  incorporation  are  specified  in  detail. 

In  addition  to  the  usual  corporate  jjowers.  such  a  company,  "whether 
sjch  powers  are  set  forth  in  its  charter  or  certificate  of  incorjM^ration 
or  not,"  shall  have  power:  To  act  as  fiscal  or  transfer  agent,  and  in 
."5uch  capacity  to  recei\e  and  disburse  money:  to  act  as  registrar;  to  act  as 


124  TRUST    COMPANIES. 

agent  for  corporations,  foreign  or  domestic;  to  receive  deposits  of  trust 
moneys,  securities  and  other  personal  property;  to  loan  on  real  or  personal- 
security;  to  hold  such  real  estate  as  is  necessary  or  convenient  for  the 
transaction  of  its  business,  or  as  its  purposes  may  require,  and  such  as  is- 
acquired  in  the  settlement  of  debts  due  to  it;  to  act  as  trustee  under  a 
mortgage  or  bond  issue,  "and  to  accept  and  execute  any  other  municipal 
or  corporate  trust  not  inconsistent  with  the  laws  of  this  State;"  to  exe- 
cute trusts  for  married  women  in  respect  to  their  separate  property  and 
to  be  their  agent  in  the  management  of  same;  to  act  under  appointment 
of  court  as  guardian,  receiver  or  trustee  of  the  estate  of  any  minor,  and 
as  depository  of  any  moneys  paid  into  court;  to  receive  and  execute  court 
trusts;  to  manage  estates;  to  receive  and  execute  trusts  of  any  nature  or 
description  confided  to  it  b}'^  persons,  bodies  politic,  corporations  or  other 
authority,  and  to  hold  any  property  or  estate,  real  or  personal,  that  may 
be  the  subject  of  any  such  trust;  "to  purchase,  invest  in  and  sell  stocks, 
promissory  notes,  bills  of  exchange,  bonds  and  mortgages  and  other  se- 
curities", but  "no  corporation  created  under  this  act  shall  have  power  to 
discount  commercial  paper";  to  give  its  bonds  or  obligations  for  moneys 
or  securities  for  moneys  borrowed  or  received  on  deposit  or  for  invest- 
ment; to  act  as  assignee  or  trustee  under  an  assignment;  to  act  as  re- 
ceiver or  trustee ;  to  act  as  executor,  administrator  or  as  committee  of  the 
estates  of  lunatics,  idiots,  persons  of  unsound  mind  and  habitual  drunk- 
ards; to  do  a  safe  deposit  business,  a  title  insurance  business,  a  fidelity 
insurance  business,  and  to  become  sole  surety  in  cases  where  by  law  twa 
or  more  sureties  are  required,  proA'ided  such  poM'ers  are  enumerated  in 
the  certificate  of  incorporation;  to  collect  coupons  or  interest  on  securi- 
ties; to  receive  and  manage  any  sinking  fund;  "generally  to  execute 
trusts  of  every  description  not  inconsistent  with  the  laws  of  this  State 
or  of  the  United  States";  to  receive  money  on  deposit  subject  to  check 
or  otherwise. 

Trust  companies  are  forbidden  to  make  loans  upon  bills,  notes  or 
other  evidences  of  debt,  except  to  a  county,  city,  town,  township, 
borough  or  municipality  of  this  State,  unless  the  same  shall  be  secured 
by  mortgage  upon  lands  or  by  other  securities,  the  actual  market  value  of 
which  other  securities  shall  at  all  times  exceed  by  at  least  ten  jDcr 
centum  the  amount  loaned  upon  the  same.  Funds  or  property  held  in 
trust  must  not  be  mingled  with  the  other  funds  or  property  of  the  com- 
pany. Such  a  company  may  not  be  appointed  to  act  as  assignee,  receiver, 
tidministrator,  guardian  or  trustee  by  any  surrogate  or  court  of  the 
State,  until  it  has  set  apart  a  fund  specially  devoted  to  securing  its  liabili- 
ties in  such  capacities  of  trust  and  confidence,  invested  in  securities  of 
the  character  in  which  trust  funds  may  by  law  be  invested,  and  has  de- 
posited such  securities  with  the  register  of  the  prerogative  court.  This 
fund  must  be  equal  to  at  least  one-fifth  the  amount  of  the  liabilities  for 
which  the  fund  is  especially  responsible,  unless  the  fund  equals  or  ex- 
ceeds $100,000 — in  -which  case  it  must  be  equal  to  at  least  one-tenth  of 


STATE    AX!)    TKKUITDKIAI.    LAWS.  l^r, 

«i3ch  liabilities.  However,  Hie  creation  of  this  fiii'd  is  not  requirtd  when 
the  trust  company  gives  security  in  the  manner  prescribed  by  law  in  such 
behalf  for  natural  jjcrsons,  or  in  cases  where  the  trust  company  shall 
have  been  appointed  as  executor  or  trustti-  by  anv  will  or  d.-id.  If  the 
deposit  be  made,  no  other  security  shall  be  required. 

A  list  of  stockholders  of  record  nuist  be  kept  which  must  be  o|)en  at 
all  times  during  business  hours  to  the  inspection  of  any  stockholder.  The 
affairs  of  every  trust  company  shall  be  managed  by  a  lH)ard  of  not  less 
than  five  directors,  elected  annually.  A  majority  of  the  Boartl  consti- 
tutes a  quorum;  ])rovided  that  if  the  number  of  direct«»r8  exceeds  nine, 
they  may  designate  nine  memlxrs,  of  whom  any  Hve  siiall  constitute  a 
quorum.  Kach  director  must  own  at  least  five  shares  of  st<K-k.  and  is 
required  to  subscribe  to  and  j)laee  on  file  an  oath  not  to  knowingly  vio- 
late, or  })ermit  to  be  violated,  the  provisions  of  the  trust  c«>mpany  law. 
Before  the  directors  may  declare  a  dividentl.  one-tenth  of  the  net  profits 
must  be  carried  to  a  sur})Kis  fund  until  such  fund  «(|uals  twenty  per 
centum  of  the  caj)ital.  The  directors  lyii.vt  appoint  exauiining  ctmimit- 
tees  who  must  examine  the  affairs  of  the  company  every  six  months.  No 
loans  may  be  made  to  directors,  officers  or  employees  unless  the  proposi- 
tion to  make  such  loan  shall  have  been  submitted  in  writing  to  the  direc- 
tors or  executive  committee  and  regularly  approved  by  a  maj«)rity  of 
those  present  constituting  a  quorum,  nor  shall  such  p«'rsons  Ix'  permitted 
to  become  indebted  to  the  company  through  an  overdraft.  At  least  two 
reports  each  year  must  l>e  made  to  the  Connnissioner  of  Hanking  and 
Insurance,  according  to  a  form  i)rescribed  by  him,  and  abstracts  of  such 
reports  must  be  jjublished  onct;  in  a  local  newspaj)er.  Tin-  Commissioner 
may  call  for  sjjccial  reports.  No  trust  company  shall  make  loans  on  its 
own  stock;  or  be  a  purchaser  of  same  imless  such  j)u.'-chas»'  be  neces- 
sary to  prevent  loss  on  a  previously  c(»ntracted  debt ;  and  stock  st>  pur- 
chased nuist  be  disj)osed  of  within  one  year.  Deposits  made  by  minors 
are  und'.'r  their  control. 

Every  trust  com])any  receiving  deposits  tW"  money  subject  to  check  or 
payable  on  demand  shall  keep  a  reserve  fund  of  fifteen  per  centum  of  all 
its  immediate  demand  liabilities.  C)ne-fifth  of  this  must  consist  of  cash 
on  hand;  the  balance  may  consist  of  deposits  in  "good,  solvent  banks  or 
trust  companies.  '  Trust  comi)anies  are  suble-et  to  the  inspection  and 
supervision  of  the  ('(.inmissioner  of  lianking  and  Insurance,  who  must 
examine  them  whtii  lit  deems  it  exj)edient  or  ;it  their  request.  If  unsafe 
conditions  are  reveahd.  he  may  take  innn«'diate  possession,  notifying  the 
Attorney-C/eneral,  who  shall  institute  such  proceedings  as  are  necessary. 
The  capital  of  a  trust  eomp my  niust  be  taxed  in  the  taxing  district  where 
its  office  is  situated,  and  its  real  estate  where  such  real  estate  is  situat«'d. 
Trust  companies  are  specially  authorized  to  act  as  depositaries  for  the 
moneys  of  counties,  cities  and  oth«  r  nmnicipalities.  Trust  companies 
may  pay  to  either  person  moneys  on  a  joint  account,  whether  the  other 
be  living  or  not.     It  is  a  misdemeanor  to  circulate  false  rejwrts  regard- 


126  TRUST    COMPANIES. 

ing  a  bank  or  trust  company.  Foreign  trust  companies  may  do  only  such 
business  as  is  permitted  to  domestic  trust  companies,  and  upon  compliance 
with  the  laws. 

(Laws  of  1899,  chapter  174;  Laws  of  1902,  chapter  71 ;  Laws  of  1903, 
chapters  210  and  21  t;  Laws  of  1906.  chapters  157  and  191;  Laws  of 
1907,  chapters  35,  40  and  50.) 

New  Mexico. 

Fifteen  or  more  persons,  a  majority  of  whom  are  residents  of  the 
Territory,  may  incorporate  a  trust  company.  Articles  of  agreement  must 
be  filed  with  the  Territorial  Auditor  of  Public  Accounts  and  with  the 
probate  clerk  of  the  county.  The  capital  stock  actually  subscribed  must 
be  at  least  $100,000,  of  which  at  least  $100,000  must  be  paid  in  lawful 
money  of  the  United  States.  The  number  of  years  that  the  corporation  is 
to  continue  may  not  exceed  fifty. 

Powers  specified:  To  receive  money  in  trust;  to  guarantee  special 
deposits;  to  do  a  safe  deposit  business;  to  accept  and  execute  all  such 
trusts  and  perform  such  duties  of  every  description  as  may  be  com- 
mitted to  them  by  courts ;  to  hold  in  trust  real  or  personal  property  from 
whatever  source  received,  and  to  execute  any  lawful  trusts  regarding 
same;  to  act  as  principal  or  surety  and  to  guarantee  against  loss  any 
principal  or  surety  on  any  bonds  required  by  law ;  to  act  as  agent  or  at- 
torney-in-fact for  persons  or  corporations  in  the  management  of  real  or 
personal  property  and  for  the  investment  of  money;  to  act  as  transfer 
agent  and  registrar;  to  execute  trusts  for  married  women  with  respect 
to  their  separate  property,  real  or  personal,  and  to  act  as  agent  in  the 
management  of  same ;  to  act  as  executor,  administrator  or  as  guardian 
of  the  estate  or  curator  of  an}'^  infant,  insane  person,  idiot  or  habitual 
drunkard  or  convict;  to  do  a  fidelity  insurance  business;  to  guarantee 
the  principal  or  interest,  or  both,  of  any  securities  of  any  kind;  to  con- 
duct a  title  insurance  business;  to  loan  money  on  real  estate  and  col- 
lateral securitj^;  to  purchase^  invest  in  and  sell  all  kinds  of  Government, 
State,  municipal  and  other  bonds,  and  all  kinds  of  negotiable  and  non- 
negotiable  paper,  and  other  investment  securities.  Courts  are  authorized 
to  appoint  trust  companies  as  administrators,  guardians,  trustees,  re- 
ceivers, assignees,  or  in  other  fiduciary  capacities,  and  as  legal  deposi- 
tories for  funds  in  the  keeping  of  persons  holding  fiduciary  appoint- 
ments. Such  court  or  officer  may  make  orders  regarding  such  trusts,  and 
require  such  accounts  as  could  be  required  of  a  natural  person 
acting  in  such  capacity.  Any  trust  company  may  qualify  as  executor, 
administrator,  guardian,  receiver,  trustee,  assignee,  committee  or  in  any 
other  fiduciary  capacity  or  as  depository  of  monej'^  in  court,  may  be- 
come sole  guarantor,  surety  upon  bonds,  and  so  on,  without  giving  bond, 
iipon  making  with  the  Auditor  of  the  Territory  a  deposit  of  not  less 
than  $50,000  nor  more  than  $200,000,  as  the  Auditor  may  from  time  to 
lime  require,  in  cash.  Treasury  notes  of  the  United  States,  or  Government, 


STATE    AND    TERRITORIAL    LAWS.  127 

State  or  Territorial  bonds,  or  bonds  of  any  county  of  this  Territory 
■which  lias  not  defaulted  in  the  payment  of  its  oblijjrations  for  five  years. 
Such  deposit  shall  be  primarily  liable  for  the  obligations  of  such  corpora- 
tion actin<r  in  fiduciary  capacities,  and  shall  not  be  liable  for  any  other 
debt  or  obligation  of  the  corporation  until  all  such  trust  liabilities  shall 
have  been  discharged.  But  such  corporations  may  act  in  such  fiduciary 
capacities  without  having  made  such  dejjosit,  upon  the  execution  and  ap- 
proval r.f  a  bond  as  required  by  law  in  the  case  of  individuals.  The  se- 
curities dejjosited  with  the  Auditor  must  be  by  him  turned  over  to  the 
Treasurer  of  the  Territory,  who  shall  ha\e  custody  of  same. 

No  dividends  may  be  declared  l)y  trust  comjjanies  until  at  least  ."?I00,- 
000  of  the  capital  stock  has  been  paid  in.  Before  dividends  are  declared, 
one-tenth  of  the  net  earnings  nmst  be  carri«d  to  a  surplus  fund  until 
such  surplus  fund  equals  twenty  i)er  centum  of  the  paid-in  cajiital  stock. 

Such  cor{)orations  may  not  make  loans  on  their  own  stock;  nor  shall 
they  purchase  their  own  stock,  except  to  prevent  loss  upon  a  debt  pre- 
viously contracted,  in  which  case  such  stock  must  be  disposed  of  within 
six  months.  Loans  to  any  one  person  may  not  exceed  twenty  per  ci-ntum 
of  the  paid  capital,  and  loans  to  any  director,  officer  or  employee  must 
not  exceed  ten  per  centum  of  the  paid  capital.  Such  corporations  must 
maintain  a  reserve  of  15  per  centum  of  their  liabilities  other  than  the 
liabilities  for  which  bonds  in  an  amount  not  less  than  $50,000  have  been 
deposited  with  the  Auditor  of  the  Territory.  Three-fifths  of  the  reserve 
may  consist  of  balances  due  the  corporation  from  any  National,  State  or 
Territorial  banks  or  from  any  trust  companies  designated  by  the  .\udi- 
lor  of  the  Territory. 

Trust  companies  are  re({uired  to  make  to  the  Auditor  of  tin-  Territory 
not  less  than  four  reports  during  each  year,  according  to  the  form 
which  may  be  prescribed  by  him,  and  such  reports  must  be  published  in 
a  local  newspaper.  The  Auditor  may  in  his  discretion  call  for  special  re- 
ports at  any  time.  He  is  required  to  make  examinations  of  trust  com- 
panies once  each  half  year,  and  oftener  if  he  deems  it  necessary.  If 
unsafe  conditions  are  found,  he  may  take  charge  of  the  company,  and 
notify  the  Governor,  who  shall  require  the  Solicitor-General  to  institute 
proceedings  for  the  appointment  of  a  receiver.  Trust  companies  may 
become  depositories  of  Territorial  moneys  to  an  amount  not  exceeding 
forty  per  centum  of  their  i)aid-up  capital.  Tiie  affairs  of  such  com- 
panies shall  be  managed  by  a  board  of  not  less  than  five  directors,  each 
of  whom  shall  own  at  least  ten  shares  of  stock,  and  a  majority  of  whom 
shall  be  bona  fide  citizens  of  the  Territory.  Directors  serve  for  one 
year,  unless  the  articles  of  incorporation  divide  them  into  classes  so  that 
the  terms  of  a  jiart  of  them  expire  each  year,  in  which  case  the  terms 
may  be  for  three  or  five  years.  They  are  required  to  take  an  oath  for  the 
faithful  performance  of  their  duties.  Trust  companies  may  hold  real  es- 
tate needed  for  the  business,  and  such  as  is  obtained  in  the  settlement  of 
debts  due   to   them,   but   the   latter   must  be   disposed   of   as   speedily   as 


128  TRUST    COMPANIES. 

possible.  Provision  is  made  for  the  conversion  of  building  and  loan 
companies  into  trust  companies.  The  provisions  of  the  general  incor- 
poration act  are  made  applicable  to  trust  companies,  so  far  as  not  in- 
consistent with  this  act. 

(Council  substitute  for  Council  bill  No.  10,  February  28,  1903; 
Laws  of  190s,  chapters  52,  54  and  115;  Laws  of  1905,  chapters  78  and 
106;  Laws  of  1907,  chapters  4,  66,  108.) 

New  York. 

Thirteen  or  more  persons  may  incorporate  a  trust  company.  An  or- 
ganization certificate  must  be  filed  with  the  Superintendent  of  Banks, 
who  is  charged  with  the  duty  of  satisfying  himself  of  the  need  of  the 
proposed  corporation  and  of  the  advisability,  of  its  incorporation.  Cap- 
ital required,  at  least  $100,000  in  towns  or  cities  whose  population  does 
not  exceed  25,000;  at  least  $150,000  in  cities  of  from  25,000  to  100,000 
inhabitants;  at  least  $200,000  in  cities  of  from  100,000  to  250,000;  and 
at  least  $500,000  in  larger  cities. 

Powers  specified:*^®  To  act  as  fiscal  or  transfer  agent  or  registrar; 
to  act  as  agent  for  corporations,  foreign  or  domestic;  to  receive  deposits 
of  trust  moneys,  securities  and  other  personal  property  from  persons  or 
corporations;  to  loan  money  on  real  or  personal  securities;  to  hold  real 
estate  necessary  for  the  transaction  of  business,  and  such  as  is  acquired 
in  the  satisfaction  or  partial  satisfaction  of  debts  due  to  the  company; 
to  act  as  trustee  under  any  mortgage  or  bond,  "and  accept  and  execute 
any  other  municipal  or  corporate  trust  not  inconsistent  with  the  laws  of 
this  State";  to  execute  trusts  for  married  women  with  respect  to  their 
separate  property,  to  act  as  agent  in  the  management  of  same;  to  act 
under  the  appointment  of  court  as  guardian,  receiver  or  trustee  of  the 
estate  of  any  minor;  to  act  as  depositary  of  moneys  paid  into  court;  to 
exercise  such  legal  trusts  in  regard  to  the  management  of  property,  real 
or  personal,  as  may  be  confided  to  it  by  courts,  persons,  corporations, 
municipalities  or  other  authority;  to  execute  trusts  and  powers  of  every 
description  received  from  any  source;  to  pui'chase,  invest  in  and  sell 
stocks,  bills  of  exchange,  bonds  and  mortgages  and  other  securities;  to 
give  its  bonds  or  obligations  for  moneys  or  securities  for  moneys  bor- 
rowed or  received  on  deposit  or  for  investment ;  to  act  as  executor,  trustee 
under  will,  administrator,  and  committee  of  the  estates  of  lunatics,  idiots, 
persons  of  unsound  mind  and  habitual  drunkards;  to  do  a  banking  busi- 
ness. No  such  corporation  may  make  any  contract  or  accept  or  execute 
any  trust  which  it  would  not  be  lawful  for  any  individual  to  make, 
accept  or  execute.  No  loan  exceeding  in  amount  one-tenth  of  the  capital 
stock  shall  be  made  by  any  such  corporation,  directly  or  indirectly,  to 
any  director  or  officer  thereof,  and  such  loans  must  have  the  consent  of  a 
majority  of  the  directors.     Foreign  trust  companies  are  forbidden  to  do 

68  The  powers  of  New  York  trust  companies  are  printed  in  full  in  Chapter  IV. 


STATE    AND    TERUITOUIAI.    LAWS.  129 

a  trust  company  business  in  New  York,  and  any  pt-rson  or  corporation  act- 
ing as  agent  for  same  is  guilty  of  a  misdemeanor.  A  trust  company  may 
have  branches  in  the  city  in  which  its  business  is  transacted,  but  not 
elsewhere:  but  written  approval  of  the  Superintendent  of  Banking 
tnust  be  obtained  for  the  opening  of  a  branch,  and  the  capital  of  the 
company  must  exceed  the  capital  required  by  law  by  the  sum  of  ?!100,- 
000  for  each  branch  office  maintained.  Courts  are  authorized  to  appoint 
trust  companies  as  administrators,  guardians,  trustees,  etc.  Moneys 
brought  into  court  on  orders  or  judgments  may  be  deposited  in  properly 
designated  and  bonded  trust  companies.  Before  engaging  in  businr>s  such 
companies  are  required  to  deposit  with  the  Superintendent  of  Banks 
securities  equal  in  value  to  ten  per  centum  of  the  paid-up  capital  stock, 
and  not  less  in  amount  than  .flOO.OOO  in  cities  of  ')()(),()()()  population  or 
more,  not  less  than  $.")0,0()0  in  cities  of  from  100,000  to  500,000  jjopula- 
tion,  not  less  than  $30,000  in  cities  of  from  25,000  to  100,000  popula- 
tion, and  not  less  than  $20,000  in  smaller  places.  These  securities  must 
consist  of  public  bonds  or  stocks  of  the  L'nited  States,  or  of  this  State, 
or  of  any  of  its  political  subdivisions;  they  nmst  Ik*  registered  in  the 
name  of  the  Superintendent  officially,  as  held  in  trust  as  security  for  the 
depKJsitors  with  and  the  creditors  of  such  corporation.  Beyond  tliis 
deposit,  no  security  shall  Ix-  required  of  trust  companies  for  or  in  re- 
spect to  any  trust,  or  when  a})j)ointed  executor,  .administrator,  guardian, 
trustee,  receiver,  committee  or  depositary;  except  that  courts  or  officers 
making  such  appointments  may,  upon  proper  application,  require  such 
security  as  they  deem  proper.  Such  courts  or  officers  may  make  further 
orders  regarding  such  trusts,  and  may  require  the  corporation  to  render 
such  accounts  as  might  be  required  of  a  natural  person  acting  in  like 
capacity.  The  capital  of  such  a  company  shall  Ih?  invested  in  bonds  and 
mortgages  on  unincumbered  real  property  in  this  State  to  the  extent  of 
60  per  centtmi  of  the  value  therof,  or  in  the  stocks  or  bonds  of  this 
State  or  of  the  United  States,  or  of  any  county  or  city  of  this  State  duly 
authorized  by  law  to  he  issued.  The  stocks  or  bonds  nuist  not  U-  valued 
on  the  books  or  in  rej)orts  at  a  higher  value  than  that  determined  by 
amortization,  so  as  to  bring  them  to  par  at  maturity.  Moneys  received 
in  trust  may  be  invested,  in  the  company's  discretion,  in  the  same 
classes  of  securities  as  the  capital,  or  in  the  stocks  or  bonds  of  any 
State  of  the  United  States,  or  in  such  real  or  personal  securities  as  it 
may  deem  proper.  No  such  corporation  shall  hold  stock  in  any  private 
corporation  to  an  amount  in  excess  of  ten  per  centum  of  its  capital,  sur- 
plus and  undivided  )>rofits;  nor  shall  it  own  stix'k  of  another  monied 
corporation  (except  of  a  safe  deposit  company  immediately  connected 
\vith  and  adjacent  to  it.)  to  an  amount  exceeding,  in  par  value,  ten  per 
centum  of  the  outstanding  capital  of  such  other  monied  cor|>oration.  On 
all  sums  of  money  not  less  than  $100  which  shall  be  collected  and  re- 
ceived by  such  corporation  acting  in  trust  capacities,  interest  must  be 
allowed  at  not  less  than  two  per  centiun  per  annum.  The  affairs  of 
9 


130  TRUST    COMPANIES. 

s-uch  corporations  shall  be  managed  by  a  board  of  directors  of  such 
number,  not  less  than  thirteen  nor  more  than  thirty,  as  shall  from 
time  to  time  be  prescribed  in  its  by-laws.  Not  less  than  one-third  of 
such  board  of  directors,  and  in  no  case  less  than  seven,  shall  constitute 
a  quorum.  Each  director  must  own  and  continue  to  own  unpledged,  at 
least  ten  shares  of  stock.  Directors  must  take  oath  for  the  faithful  per- 
formance of  their  duties.  They  must  be  divided  into  three  classes,  so 
that  the  terms  of  office  of  one-third  of  the  members  shall  expire  each 
year,  each  member  then  being  elected  for  a  term  of  three  years.  The 
directors  must  meet  once  a  month.  They  must  designate  an  officer  or 
officers  whose  duty  it  shall  be  to  submit  to  each  director  at  each  regular 
meeting,  or  to  an  executive  committee  of  at  least  five  members  of  the 
board  a  written  statement  of  all  purchases  and  sales  of  securities,  and 
cf  every  discount  and  loan  of  $1000  or  more  made  since  the  last  meeting 
of  the  board,  with  description  of  collateral,  together  with  other  informa- 
tion. A  verified  copy  of  this  statement  must  be  filed  with  the  records. 
Specially  chartered  trust  companies  are  subject  to  the  provisions  of  the 
general  laAv  so  far  as  not  inconsistent  with  the  special  laws  relating  ta 
them. 

Trust  companies,  in  common  with  other  financial  institutions,  are  re- 
quired to  render  reports  to  the  Superintendent  of  Banks,  upon  his  call,^ 
at  least  once  every  three  months,  such  reports  to  contain  such  particulars 
as  the  Superintendent  may  prescribe.  Summaries  of  such  reports  must 
be  published  in  a  local  newspaper.  Trust  companies  are  subject  to  the 
supervision  and  inspection  of  the  Superintendent  of  Banks,  who  must 
examine  them  at  least  twice  a  year  or  oftener  at  his  discretion.  If  un- 
safe conditions  are  revealed,  he  must  notify  the  Attorney-General,  and 
may  take  possession  of  the  company  until  the  termination  of  the  action 
instituted  by  the  Attorney-General.  Special  examinations  by  order  of 
the  supreme  court  may  be  made  on  application  of  creditors  or  share- 
holders whose  debts  or  shares  amount  to  $1,000.  All  official  communica- 
tions from  the  State  Banking  Department  must  be  submitted  to  the 
Directors  at  their  next  meeting  after  receipt  of  same. 

In  April  and  October  of  each  year  the  Directors  are  required  to 
examine  the  company  or  cause  a  committee  of  at  least  three  of  their 
number  to  do  so.  The  examination  is  to  concern  particularly  the  loans 
and  discounts,  and  the  statute  specifies  what  it  must  cover.  Within  ten 
days  after  completion,  a  written  report  of  the  examination  must  be  made 
to  the  directors,  which  must  be  placed  on  file  in  the  company's  records, 
and  a  duplicate  of  the  report  must  be  filed  with  the  Banking  Department. 

Such  a  corporation  is  prohibited  from  making  loans  to  one  person,, 
company,  corporation  or  firm  to  an  amount  exceeding  ten  per  centum  of 
its  paid  capital  and  surplus:  provided,  however,  that  a  trust  company 
having  its  principal  place  of  business  in  a  borough  in  any  city  which 
borough  had  at  the  last  census  a  population  of  1,800,000  or  over  (i.  e.,. 
the  borough  of  ^lanhattan  in  New  York  city)   may  loan  to  one  interest 


STATE    AND    TERRITORIAL    LAWS.  131 

uot  cxc'teding  2'>  ptr  ccnluin,  and  a  trust  company  locattd  t-lscwljcrc 
in  the  State  may  loan  to  one  interest  not  cxe*  tding  U)  ptr  ciiitum  of  its 
paid  capital  and  surplus,  ui)on  security  worth  at  least  15  per  centum  more 
than  the  amount  of  the  loans;  or,  it  may  loan  10  per  centum  as  first  pro- 
vided, and  may  loan  a  further  sum,  which  shall  not  exceed  15  per  centum 
if  the  trust  company  is  located  in  the  horough  of  Manhattan,  or  which 
shall  not  exceed  .'JO  per  centum  if  located  elsewhere,  upon  securities  worth 
at  least  15  per  centum  more  than  the  amount  of  such  loan  so  secured;  or 
it  may  make  bona  fide  discounts  for,  or  purchase  business  j)aper  from  one 
interest,  to  an  amount  which  shall  not  exceed  'J")  per  centum  of  the  com- 
pany's paid  cajjital  and  surplus  if  the  conipany  is  located  in  the  borough 
of  Manhattan,  or  to  an  amount  not  exeeedinj;  40  per  centum  if  the  com- 
pany is  located  elsewhere;  provided  further,  that  the  total  liability  of 
any  one  interest  shall  not  exceed  25  per  centum  of  the  paid  capital  and 
surplus  of  the  trust  company  if  it  is  located  in  the  boroufjh  of  Man- 
hattan, or  K)  per  centum  if  it  is  located  elsewher*-.  Loans  "upon  the 
securities  of  one  or  more  corporations  the  payment  of  which  is  under- 
taken in  whole  or  in  part  severally,  but  not  j«)intly,  by  two  or  more  in- 
dividuals, firms  or  corporations"  (i.  e.,  "Underwritinj;  Loans")  may  not 
be  made  under  any  circumstances  to  an  amount  exc«edinp  •J5  per  centum 
of  the  capital  and  surplus  of  the  trust  company  making  such  loan;  and 
such  loans  are  absolutely  prohibited  (a)  if  the  lH>rrower  or  underwriters 
be  obligated  absolutely  or  contingently  to  purchase  the  securities  col- 
lateral to  such  loan,  unless  they  have  paid  at  least  '25  |Kr  centum  of  the 
amounts  for  which  they  remain  obligated;  or  (b)  if  the  trust  company 
making  the  loan  is  liable  directly  or  contingently  for  the  repayment  of 
any  {)art  of  the  loan;  or  (c),  if  its  term,  including  renewal,  by  agreenH  iit. 
express  or  implied,  exceeds  the  period  of  one  year.  Real  estate  mortgage 
loans  may  not  be  made  on  property  already  encumbered,  if  the  prior 
liens  exceed  ten  per  centum  of  the  capital  and  surplus  of  the  company, 
or  if  the  sum  of  all  the  mortgages  thereon  will  exceed  two-thirds  of  tin- 
appraised  value  of  the  property.  Mortgages  and  assiginnents  thereof 
must  be  immediately  recorded.  The  limit  of  direct  or  indirect 
aggregate  loans  upon  real  estate  security  is  15  per  centum  of  the 
company's  assets  if  the  company  is  located  in  Manhattan  b<irough.  or 
'25  per  centum  if  the  company  is  located  elsewhere.  No  trust  company 
nor  its  officers  nor  agents  may  purchase  paper  at  less  than  its  face  value, 
nor  may  officers  or  agents  make  loans  that  have  Ix-en  refused  by  the 
company.  Deposits  may  not  be  made  in  other  monied  corporations 
imless  same  have  been  designated  as  depositaries  by  majority  vote  of  the 
directors.  Directors,  officers  and  clerks  are  forbidden  to  Iwrrow  of  the 
company,  directly  or  indirectly,  without  approval  of  a  majority  of  the 
board  of  directors.  Such  corporations  may  not  make  loans  on  their  own 
stock;  nor  may  they  jiurchase  same,  unless  to  prevent  loss  upon  a  debt 
previously  contracted  in  good  faith;  in  which  case  the  stock  must  be 
disposed  of  within  six  months.     Loans  upon  the  stock  of  another  monied 


1S2  TRUST    COMPANIES. 

corporation  are  limited  to  ten  per  centum  of  the  capital  of  such  other 
monied  corporation. 

Each  trust  company  having  a  capital  of  $250,000  or  upward,  and 
having  its  principal  place  of  business  within  a  town  adjoining  a  city, 
containing  over  800,000  or  less  than  1,000,000  inhabitants,  may  add  to  its 
powers  that  of  a  safe  deposit  business  and  of  a  title  insurance  business. 
The  same  privilege  is  extended  to  stock  companies  having  capital  of 
$500,000  or  upward,  and  located  in  counties  containing  from  300,000  to 
(300,000  inhabitants.  The  safe  deposit  business  may  be  undertaken  by 
trust  companies  having  a  capital  of  $200,000  or  upward  and  situated  in 
a  county  containing  from  65,000  to  300,000  inhabitants,  or  in  a  county 
containing  from  50,000  to  75,000  inhabitants.  Trust  companies  may 
merge  with  title  and  credit  guaranty  corporations,  acquiring  their  powers. 
Every  trust  company  having  its  principal  place  of  business  in  the 
borough  of  Manhattan,  New  York  city,  must  maintain  a  reserve  of  15 
per  centum  of  its  aggregate  deposits  less  trust  funds  and  time  deposits 
not  payable  within  thirty  days,  and  less  tlie  deposits  secured  by  New 
York  State  bonds.  All  of  this  reserve  must  be  in  cash.  Trust  companies 
in  other  boroughs  of  New  York  city  must  maintain  reserves  of  15  per 
centum,  of  which  two-thirds  must  be  in  cash.  Trust  companies  elsewhere 
in  the  State  must  keeji  reserves  of  ten  per  centum,  of  which  one-half 
must  be  in  cash.  That  part  of  the  reserve  not  kept  in  casli  may  be  on 
demand  deposit  with  any  bank  or  trust  company  in  the  State  having  at 
least  $200,000  capital  or  $300,000  capital  and  surplus,  and  approved  by 
the  Superintendent  of  Banks.  (These  reserve  requirements  went  into  full 
effect  on  February  1,  1909-) 

Directors  M'ho  vote  to  make  illegal  loans  to  directors;  directors,  of- 
ficers or  employes  who  make  deposits  with  other  corporations  for  the 
consideration,  express  or  implied,  of  a  loan,  or  who  make  agreements  that 
the  holder  of  a  certificate  of  deposit  may  receive  payment  of  same  in 
advance  of  maturity;  officers  or  employes  wiio  intentionally  conceal  from 
the  directors  any  loans  or  discounts  or  purchases  or  sales  of  securities 
made  between  meetings  of  directors,  or  Avho  knowingly  fail  to  report 
same;  are  guilty  of  misdemeanors. 

Before  declaring  a  dividend,  trust  companies  must  transfer  one-tenth 
of  tlieir  net  earnings  to  surplus  until  the  latter  equals  twenty  per  centum 
of   the   capital. 

Minors  may  control  their  deposits  in  trust  companies  and  other  finan- 
cial institutions.  Deposits  made  by  one  person  in  trust  for  another  may 
be  paid  to  the  latter  upon  the  death  of  the  former.  The  money  in  a 
joint  account,  in  whole  or  in  part,  may  be  paid  to  either  party  during 
the  life-time  of  both  or  to  the  survivor  after  the  death  of  one  of  them. 
No  official  oath  shall  be  required  from  a  trust  company  which  has  been 
appointed  executor,  administrator,  guardian,  trustee,  receiver  or 
committee. 


STATE    AND    TERHITORIAL    LAWS.  133 

(General  I.aws  and  lievised  Statutes  [Heydecker].  chapter  37,  arti- 
cle 4,  sections  IT)©  to  iGS.  Laws  1896,  chapter  8.31  [p,  4816"  Heydecker] 
Laws  1900,  chapter  55-2.  Laws  1 901,  chapters  117.  118,  l.S-J,  H:i.  .I.S'*.  (577. 
Laws  190'2,  chapters  172,  360.  Laws  19OM,  chapter  1()().  Laws  1904, 
chapters  479,  492,  607.  Laws  190.'5,  chapters  297.  394,  414,  4l6,  418, 
'i-56.  LaM's  1906',  chapters  337,  tSl,  .'572.  601.  Laws  1907,  chapters  121, 
247,  408,  522,  6l2,  739.  Laws  I9OS,  chapters  UK.  l-n.  Iv'l,  143,  152, 
155,  157,  169,  184.  194.) 

North  Carolixa. 

Trust  conii)anies  are  incorpor.ited  by  special  acts  of  the  Legislature. 
wliieh  define  their  powers  and  tluir  limitations.  Also,  by  anundnunt  of  the 
banking  laws,  ratified  March  S,  1907,  trust  companies,  which  arc  re- 
ferred to  as  corporations  which  transact  "banking  and  trust,  fiduciary  or 
surety  business",  are  made  subject  to  the  general  banking  law.  Number 
of  corporators  required,  three  or  more.  The  shares  of  stock  must  be  of 
n  par  vahie  of  either  $50  or  •'^lOO.  The  minimum  capital  allowed,  of 
which  at  least  fifty  per  centum  must  be  paid  in  beforr  Inginning  business, 
is  .$5,000  in  towns  of  1,500  inhabitants  or  less;  .$10,000  in  towns  of 
from  1,500  to  5,000  people,  and  $2."»,000  in  larger  places.  The  filing  of 
certificate  of  incor})oration  and  other  formalities  are  provided  for.  Not 
n:orc  than  twenty-five  per  centum  of  the  capital  may  be  invested  in  real 
estate,  unless  to  jjrotect  loans  or  other  debts  due  the  company.  \  reserve 
of  fifteen  per  centum  of  the  deposits  must  be  maintained,  of  which  at 
least  two-fifths  must  be  in  cash.  Loans  to  one  person,  firm  or  corpora- 
tion are  limited  to  ten  per  centum  of  the  paid  capital,  but  this  does  not 
apply  to  ccm]ianies  having  a  capital  of  $100,000  or  less.  The  stock 
holders  are  subject  to  double  liability. 

All  banking  corporations,  including  trust  companies,  arc  under  the 
supervision  of  the  Corporation  Commission.  To  this  commission  they 
must  render  at  least  four  reports  each  year,  and  such  reports  must  be 
publislied  in  local  papers.  The  reports  must  show  "the  entire  amount  of 
trust  and  surety  and  fiduciary  and  guarantee  business  as  a  part  of  the 
liabilities."  If  it  is  found  that  "such  liabilities  are  equal  to  the  amount 
of  the  capital  stock,  the  said  Corporation  Commission  shall  have  the 
authority,  and  it  is  hereby  empowered,  to  make  such  rules  and  regula- 
tions and  reductions  of  said  liabilities  as  it  may  deem  necessary  for  the 
protection  of  the  creditors  and  depositors  of  such  banking  institution." 
The  Commission  must  appoint  an  examiner,  who  must  examine  each  com- 
pany at  least  once  a  year. 

The  granting  of  a  number  of  trust  jiowers  is  authorized  by  the  "In- 
surance Act  of  1899",  which  provides  for  the  formation  of  fidelity  insur- 
ance companies.  Tluse  are  referred  to  in  the  marginal  note  as  "l>ond 
and  trust  companies",  and  their  purpose  is  thus  stated:  "To  guarantee 
tJie  fidelity  of  persons  in  positions  of  trust.  |)rivate  or  public,  and  to  act 


134  TRUST    COMPANIES. 

as  surety  on  official  bonds,  and  for  the  performance  of  other  obligations." 
They  must  have  ten  or  more  corporators,  and  the  words  "insurance  com- 
pany" must  form  a  part  of  their  titles.  The  powers  specified  for  such 
companies  are  to  do  a  fidelity  insurance  business  and  to  act  as  surety  on 
bonds ;  to  do  a  title  insurance  business ;  to  act  as  guardian,  trustee, 
assignee,  receiver,  executor  or  administrator  in  the  State,  without  giving 
bond;  and  the  proper  courts  and  officers  are  clothed  with  authority  to 
appoint  these  companies  to  such  trusts,  whether  the  companies  be  resi- 
dents of  the  State  or  not.  Such  companies  must  make  an  annual  state- 
ment to  the  Insurance  Commissioner,  and  must  get  from  him  a  license, 
for  which  the  annual  fee  is  $25  for  domestic  and  $100  for  foreign  com- 
panies. The  original  idea  of  the  trust  company  as  a  kind  of  insurance 
company  is  noticeable  in  this  act. 

(Laws  of  North  Carolina,  Revisal  of  190;>,  chapter  7,  sections  222 
to  251.  Chapter  100,  passim,  especially  sections  4726,  4799  to  4804. 
Statutes  1907,  chapter  829-) 

North  Dakota. 

Nine  or  more  persons  may  incorporate  to  conduct  the  business  of  "an 
annuity,  safe  deposit,  surety  and  trust  company",  to  have  perpetual  suc- 
cession. Articles  of  incorporation  must  be  filed,  and  other  preliminaries 
attended  to  as  prescribed  in  chapter  1 1  of  the  Civil  Code.  The  capital 
must  be  at  least  $100,000,  divided  into  shares  of  $100  each.  Of  this 
$50,000  must  be  paid  in  before  commencing  business,  and  the  balance 
must  be  jiaid  within  two  years.  The  $50,000  required  to  be  paid  in  be- 
fore commencing  business  must  be  invested  in  bonds  of  the  United  States, 
or  of  the  State  of  North  Dakota,  or  in  the  bonds  of  other  States,  which 
have  the  approval  of  the  State  Auditor  and  State  Examiner,  or  in  the 
bonds  or  obligations  of  townships,  school  districts,  cities,  villages  and 
counties  within  the  State,  which  bonds  or  obligations  have  not  been 
issued  as  a  bonus  for,  or  jDurchase  of,  or  subscription  to  any  railroad  or 
other  private  enterprise,  and  whose  total  bonded  indebtedness  does  not 
exceed  five  per  centum  of  the  then  assessed  valuation  thereof,  or  in  bonds 
or  promissory  notes,  secured  by  first  mortgages  or  deeds  of  trust  upon 
unencumbered  real  estate  in  the  State  worth  three  times  the  amount  of 
the  obligation  so  secured.  These  securities  must  be  assigned,  trans- 
ferred and  delivered  to  the  State  Auditor,  to  be  held  by  him  as  collateral 
security  for  the  depositors  and  creditors  of  said  corporation,  and  for  the 
faithful  execution  of  any  trusts  it  may  undertake.  The  company  shall 
be  managed  by  a  board  of  directors,  not  less  than  nine  nor  more  than 
fifteen  in  number,  a  majority  of  whom  shall  be  citizens  of  the  State, 
and  each  of  whom  must  own  at  least  ten  shares  of  stock.  The  specified 
powers  of  such  corporations  are:  To  hold  real  estate  necessary  for  the 
convenient  transaction  of  its  business,  and  for  the  use  and  occupation  of 
its  officers,  agents  and  employees,  and  for  the  safe  keeping  of  its  assets. 


STATE   AND   TKRIUTOIllAI.    LAWS.  \S:> 

deposits  and  proj)frty  lu-ld  in  trust,  and  such  as  is  acquired  in  the  satis- 
faction of  debts  due  to  it;  but  no  part  of  its  funds  may  be  invested  in 
real  estate  except  as  above  authorized,  except  that  trust  funds  may  be  so 
invested  if  the  instrument  creating  the  trust  or  a  particular  contract  so 
specifies,  and  not  otherwise;  to  loan  mont-y  on  mortgage  security;  to 
purchase  notes,  bonds,  mortgages  and  other  evidences  of  indebtedness; 
to  hold  in  trust  any  real  or  personal  property  by  order  of  court,  or  from 
corporations  or  persons,  and  to  execute  any  legal  trusts  witli  regard  to 
same;  to  execute  trusts  for  minors  and  for  married  women  with  respect 
to  thtir  separate  property,  real  or  personal,  and  to  act  as  agent  for  the 
management  of  same;  to  act  as  fiscal  and  transfer  agent  and  registrar; 
to  hold  on  deposit  for  savings  account,  or  for  safe  keeping,  or  in  escrow, 
moneys  and  securities  in  the  keeping  of  public  or  private  oHieials  or  of 
persons  holding  fiduciary  appointments,  the  officers  or  persons  so  de- 
positing being  relieved  fniin  liability  for  such  deposits;  companies  re- 
ceiving savings  deposits  shall  be  subject  to  the  laws  of  the  State  regard- 
ing reports  and  examinations  of  Savings  banks;  to  act  as  trustee,  assignee, 
receiver,  administrator,  executor,  guardian  of  the  estate  of  any  minor, 
lunatic,  imbecile,  spendthrift,  habitual  drunkard  or  other  person  dis- 
qualified to  manage  an  estate;  courts  are  authorized  to  make  such  ap- 
pointments ;  "to  receive  deposits  of  money  for  general  savings  account, 
for  safe  keeping,  or  for  investment";  "to  loan  money  upon  such  securities 
as  may  be  deemed  advisable  by  its  board  of  directors,  and  to  borrow 
money  in  like  manner  upon  the  security  of  its  own  j)roperty  or  credit"; 
to  act  as  attorney  in  fact  for  public  or  private  corporations  or  persons 
in  the  managemtnt  of  real  or  personal  property;  to  do  a  title  insurance 
business;  to  do  a  fidelity  insurance  business.  Trust  funds  and  property 
must  be  kept  separate  from  the  j)roj)erty  of  the  company  and  Ik-  readily 
identifiable.  Special  directions  regarding  investments  in  an  instrument 
creating  a  trust  must  be  follo\\t'd.  Trust  companies  may  accept  and 
execute  any  trust  herein  authorized,  or  act  as  sole  surety  on  lH>nds.  with- 
out giving  security,  other  than  the  dejjosit  with  the  State.  Trust  funds 
of  over  $100  in  amount,  not  required  for  the  us«'s  of  the  trust  for  a  year, 
must  be  invested  in  the  classes  of  securities  s])ecified  for  the  deposit  with 
the  State.  I>oans  may  not  be  made  to  directors,  officers  or  employees; 
2»or  shall  such  persons  become  indebted  to  the  company  in  any  way 
unless  authorized  in  regular  form  by  the  directors  or  investment  com- 
mittee. Such  corijorations  are  subject  to  further  orders  of  courts  ap- 
pointing them  to  fiduciary  offices,  and  must  render  statements  called  for 
or  required  by  law  to  such  courts.  They  are  subject  to  the  general 
jurisdiction  of  the  district  court  of  the  county.  They  must  render  an 
annual  statement  as  of  June  1  to  the  State  Examiner,  giving  details 
called  for  by  him,  and  must  publish  a  condensed  statement  of  such  report 
in  a  local  newspaper.  The  Public  Examiner  must  examine  such  com- 
panies once  every  six  months,  without  notice  to  officers  thereof,  or  oftener 
if  requi'"ed  by  written,  verified  information  from  a  person  interested  in  a 


136  TRUST    COMPANIES. 

trust  held  by  the  company.  If  unsafe  conditions  are  found  and  persisted 
JH;  he  shall  notify  the  Attorney-General,  who  shall  institute  such  pro- 
ceedings as  are  called  for. 

(Revised  Code  1905,  chapter  22,  paragraphs  4677-4692.) 


Ohio. 

Five  or  more  persons  may  become  incorporated  to  establish  "a  com- 
mercial bank,  a  savings  bank,  a  safe  deposit  company,  a  trust  company, 
or  to  establish  a  company  having  departments  for  two  or  more,  or  all 
of  said  classes  of  business'".  The  articles  of  incorporation  must  specify 
what  classes  of  business  are  to  be  included.  Capital  required,  of  a  trust 
company,  or  of  a  combined  trust  company  and  safe  deposit  company  or 
of  a  combined  trust  company  and  savings  bank,  .$100,000;  of  a  combined 
trust  company,  savings  bank  and  safe  deposit  company,  or  of  a  combined 
trust  company,  savings  bank,  commercial  bank  and  safe  deposit  company, 
$125,000.  Fifty  per  centum  of  the  cajiital  must  be  paid  before  begin- 
ning business,  and  the  balance  at  the  rate  of  ten  per  centum  per  month. 
The  board  of  directors  must  number  from  five  to  thirty,  three- fourths  of 
whom  must  be  residents  of  the  State,  and  each  of  whom  must  own  at 
least  five  shares  of  stock.  They  must  take  an  oath  of  office.  They  may 
elect  an  executive  committee  of  at  least  three  of  their  number,  which 
must  meet  at  least  once  a  month. 

The  trust  powers  specified  are:  To  do  a  safe  deposit  business;  to  col- 
lect income  or  principal  of  property  held  for  safe  keeping;  to  act  as  reg- 
istrar and  transfer  agent;  to  act  as  depository  of  court  funds;  to  receive 
and  hold  money  or  property  in  trust  or  on  deposit  from  fiduciaries,  corpo- 
rations or  individuals;  to  act  as  trustee  under  any  will  or  instrument  creat- 
ing a  trust  for  the  care  and  management  of  property,  "under  the  same 
circumstances',  in  the  same  manner,  and  subject  to  the  same  control  by 
the  court  having  jurisdiction  of  the  same,  as  in  the  case  of  a  legally 
qualified  person";  to  execute  "all  such  trusts  of  every  description  as 
may  be  committed  to  such  company  by  any  person  or  persons,  or  any 
corporation,  by  grant,  assignment,  devise  or  bequest,  or  which  may  be 
committed  or  transferred  to,  or  vested  in,  such  company,  whether  the 
same  be  to  act  as  executor,  administrator,  assignee,  guardian,  receiver  or 
trustee,  or  in  anj^  other  trust  capacity",  by  order  of  court;  to  receive  and 
take  any  real  estate  which  may  be  the  subject  of  any  such  trust,  and  to 
act  as  agent  under  any  power;  provided,  any  such  appointment  as 
guardian  shall  apply  to  the  estate  only,  and  not  to  the  person.  (But 
that  part  of  the  statutes  which  authorizes  probate  courts  to  appoint  trust 
companies  administrators,  etc.,  was  by  the  Supreme  Court  of  the  State, 
in  1903,  declared  unconstitutional.)  Courts  may  order  moneys  paid  to 
them,  or  in  their  charge,  deposited  in  trust  companies.  Minors  may 
control  their  accounts. 


STATE  AND  TERIilTOHIAL  LAWS.  137 

Before  dividends  are  declared  oiie-tcnth  of  the  net  profits  must  be 
carried  to  surplus  until  same  equals  -20  per  centum  of  the  capital. 
Stockholders  are  not  subject  to  double  liability.  Checks  may  not  be 
certified  unless  the  drawer  has  a  balance  to  cover  same,  and  certified 
cheeks  must  be  charged  at  once.  Violation  of  this  rule  is  punishable  by 
fine  or  imprisonment  in  the  penitentiary,  or  both.  Emlwzzlement,  the 
making  of  false  entri^-s.  fictitinus  lK)rr<)wing  with  fraudulent  intent  to 
deceive  examiners,  the  making  of  fal^e  statements  or  reports  with 
fraudulent  intent,  are  crimes  punishable  by  imprisonment  in  the  peni- 
tentiary or  fine,  or  both. 

A  separate  trust  department  must  be  maintained,  whose  assets  shall 
not  be  liable  for  any  other  liabilities  of  tlie  corporation;  and  separate 
sets  of  books  must  be  kept  for  each  department  maintained.  No  trusts 
may  be  aceej)ted  unless  the  company  has  made  a  deposit  with  the 
treasurer  of  State,  said  deposit  to  be  $50,000  if  the  company's  capital 
is  $200,000  or  less,  and  -i^lOO.OOC^  if  its  capital  is  larger.  This  deposit 
may  be  in  cash,  in  government  or  municipal  bonds  or  in  certain  railroad 
bonds.  The  securities  may  be  exchanged,  and  tlie  company  may  receive 
the  income  so  long  as  solvent. 

The  reserve  required  (which  is  the  same  as  that  required  of  savings 
banks),  is  1.5  per  centum  of  total  deposits.  At  least  six  per  centum  of 
demand  deposits  and  at  least  four  per  centum  of  time  deposits  must  be 
in  cash  in  the  vaults;  the  balance  of  the  reserve  may  be  on  deposit  with 
other  banks  or  trust  companies  designated  by  the  Iward  of  directors, 
whose  resolution  regarding  same  shall  be  certified  to  the  .Superintendent 
of  Banks.  But  where  the  reserve  required  to  be  kept  in  the  vaults  ex- 
ceeds $500,000,  the  excess  above  that  amount  may  be  invested  in  I'nited 
States  bonds.  No  reserve  is  required  on  trust  funds.  Trust  companies — 
and  other  banks — may  own  such  real  estate  as  is  "useful  for  the  con- 
venient transactions  of  its  business",  from  portions  of  which  not  re- 
quired for  its  business  a  revenue  may  be  derived;  but  the  cost  of  land 
and  buildings  may  not  exceed  60  per  centum  of  paid  capital  and  surplus. 
It  may  also  hold  such  real  estate  as  is  transferred  to  it  as  security  for 
debts;  and  such  as  is  obtained  by  foreclosure  or  on  judgments  or  decrees, 
but  the  last  named  must  not  be  held  more  than  five  years  except  on 
authorization  by  the  Superintendent  of  Banks. 

Loans  to  one  interest  including  overdrafts,  may  not  exceed  20  per 
centum  of  the  paid  capital  and  surplus.  Bona  fide  discounts  are  not  con- 
sidered as  money  borrowed.  Loans  upon  real  estate  must  be  approved 
by  the  board  of  directors,  and  may  not  in  the  aggregate  exceed  60  per 
centum  of  the  capital,  surplus  and  deposits,  and  real  estate  loans  must 
be  upon  real  estate  situated  in  Ohio  or  states  iuunediately  adjacent 
thereto,  and  shall  not  exceed  40  per  centum  of  the  value  of  said  real 
estate,  if  unimproved,  or  60  per  centum  of  its  value,  if  improved.  Loans 
may  not  Ik-  made  ui)on  the  company's  own  stock;  nor  may  same  be  pur- 


138  TRUST    COMPANIES. 

chased  except  to  prevent  loss  upon  debts  previously  contracted  in  good 
faith:  stock  so  acquired  shall  be  sold  within  six  months.  Not  more  than 
20  per  centum  of  the  capital  and  surplus  may  be  invested  in  any  one 
stock,  security  or  loan,  except  in  a  building  and  vaults  or  in  specified 
government  and  municipal  securities.  The  exact  limitations  regarding 
loans  and  investments  dejiend  upon  whether  the  corporation  is  organized 
as  a  trust  company  only,  or  as  a  trust  company  M'ith  other  departments, 
—banking,  savings  and  safe  deposit.  In  the  investment  of  trust  funds, 
the  directions  of  the  instrument  creating  the  trust  must  be  followed. 
Unless  otherwise  directed  in  such  instrument,  such  funds  may  be  invested 
in  a  general  trust  fund ;  but  no  trust  funds  may  be  mingled  with  the  other 
assets  of  the  company. 

Trust  companies,  and  all  other  banking  institutions  except  building 
and  loan  associations,  are  under  the  supervision  of  the  Superintendent 
of  Banks,  to  whom  they  must  render  at  least  four  reports  each  year, 
upon  his  calls,  which  shall  be  made  (as  of  a  past  day)  so  far  as  possible 
for  the  same  days  for  which  reports  of  national  banks  are  called. 
Special  reports  may  be  called  at  the  discretion  of  the  Superintendent. 
The  reports  must  be  published  in  local  papers.  The  Superintendent 
must  examine  each  company  at  least  twice  each  year,  without  previous 
notice,  in  the  presence  of  a  majority  of  the  members  of  the  executive 
committee.  Courts  may  appoint  persons  to  examine  a  company  regard- 
ing a  trust,  upon  written  application  of  a  party  interested  in  the  estate 
held  under  such  trust.  Examinations  must  be  made  annually  by  a  com- 
mittee of  at  least  two  directors  or  stockholders,  and  a  copy  of  their  report 
filed  with  the  Superintendent  of  Ranks. 

(Acts  of  1908,  H.  B.  No.  833,  passed  in  April,  1908.  This  bill 
repeals  all  acts  inconsistent  therewith,  but  does  not  go  into  complete 
operation  until  April  1,  1910.  See  also  Bates"  Annotated  Ohio  Statutes, 
§§  381 7-382 Iggg,  except  such  sections  as  are  specifically  repealed  by 
the  above  bill.) 

Oki-a.iioma. 

Three  or  more  persons  may  incorporate  a  trust  company.  The  nttm 
ber  of  years  the  corporation  is  to  continue  may  not  exceed  fifty.  Cap- 
ital required,  not  less  than  $100,000  in  towns  of  less  than  10,000 
inhabitants,  and  not  less  than  $200,000  in  larger  places;  one-half  paid 
in  cash,  and  the  balance  to  be  paid  within  six  months.  The  capital  may 
not  exceed  $10,000,000.  The  affairs  of  the  corporation  shall  be  man- 
aged by  a  board  of  directors,  not  less  than  five  nor  more  than  twenty- 
five  in  number,  each  of  whom  must  be  a  stockholder.  If  the  number 
<  xceeds  five,  they  shall  be  divided  into  three  classes  so  that  the  terms  of 
one-third  shall  expire  each  year,  the  terms  of  each  thereafter  being 
three  years. 

Powers   specified:     The  ordinary  powers   of  corporations;   to  receive 


STATE   AND   TERHITOUIAL   LAWS.  139 

savings  accounts,  and  the  payment  to  tliem  on  tli'"ir  order  of  deposits 
made  by  minors  shall  he  binding  on  them;  to  guarantee  special  deposits; 
to  do  a  safe  deposit  business;  to  accept  and  execute  trusts  and  duties  of 
everv  description  committed  to  them  by  persons  or  corporations;  to  ac- 
cept and  execute  court  trusts;  to  act  as  assignee,  receiver,  trustee  and 
depository;  to  hold  in  trust  any  real  or  personal  property  from  whatever 
source  received,  and  in  whatever  manner  conveyed,  and  to  execute  any 
lawful  trusts  in  regard  to  same;  to  act  as  surety  on  bonds,  and  to  guar- 
antee against  loss  any  principal  or  surety  on  a  l)ond ;  to  do  a  fidelity  in- 
surance business;  to  act  as  agents  and  attorneys  in  fact  for  persons  and 
cof{)orations  for  the  management  of  real  or  personal  property  and  for 
the  investment  of  money:  to  act  as  registrar  or  transfer  agent;  to  execute 
trusts  for  married  women  with  respect  to  their  separate  property,  real  or 
personal,  and  as  agents  for  the  management  of  same;  "and  generally 
to  have  and  exercise  such  powers  as  are  usually  had  and  exercised  by 
trust  companies";  to  act  as  executor,  administrator,  guardian  or  curator 
of  any  infant,  insane  person,  idiot  or  habitual  drunkard,  or  trustee  of 
<any  convict  in  the  penitentiary;  to  loan  money  upon  real  estate  and  col- 
lateral security;  to  issue  its  notes  and  debentures  payable  at  a  future 
time,  and  to  ])ledge  its  mortgages  on  real  estate  and  other  securities  as 
security  therefor,  which  notes  and  debentures  may  be  issued  to  an  amount, 
not  exceeding  in  the  aggregate,  ten  times  the  j)aid  capital  of  the  com- 
pany, and  shall  in  no  case  exceed  the  amount  of  the  Hrst  mortgages 
pledged  to  secure  their  payment;  to  buy  and  sell  tlu-  Iwnds  and  warrants 
of  this  State,  and  all  other  kinds  of  Governinent.  State  and  numicipal 
bonds,  and  all  kinds  of  negotiable  and  non-negotiable  paper,  stocks  and 
other  investment  securities.  Moneys  jjlaced  in  charge  of  the  corporation 
may  be  invested  in  loans  secured  by  real  estate  or  other  sufficient  col- 
lateral security,  in  jiublic  bonds  of  the  United  States,  or  of  this  State 
or  of  any  State,  or  in  the  bonds  or  stocks  of  any  county  or  school 
district,  or  any  incorporated  city,  town  or  village  of  any  State.  Such 
corporation  may  own  only  such  real  estate  as  is  required  for  the  tran- 
saction of  its  business,  and  such  as  is  acquired  in  the  settlement  o(  debts 
due  to  it.  The  directors  are  required  to  render  full  statements  to  tlu 
stockholders  as  often  as  once  in  each  year.  The  lH>oks  and  records  of 
the  coni})any  shall  be  kept  open  "for  the  in>pection  of  all  persons 
interested."  Trust  companies  may  qualify  as  guardian,  curator, 
executor,  administrator,  assignet.  reeeiv«r.  trustee  or  dep«»sitary 
ol"  money  in  court,  without  giving  K)nd  as  sueh.  and  become 
sole  guarantor  or  surety  upon  any  Iwnd  requir«d  by  the  laws  of  the 
State,  any  other  statute  to  the  contrary  notwithstanding,  as  well  a» 
to  insure  the  fidelity  of  persons  holding  places  of  public  or  private  trust; 
provided,  such  company  shall  first  deliver  into  the  custody  of  the  Treas- 
urer of  the  State  a  deposit  of  $.'>().000.  consi.sting  of  cash  or  Govern- 
ment, county  or  municipal  bonds,  or  bonds  or  warrants  of  the  State, 
or    notes    or    debentures    secured    by    first    mortgage    or    deeds    of   trust 


140  TRUST    COMPANIES. 

on  real  estate  situated  in  the  State,  worth  at  least  double  the  amount 
loaned  thereon,  and  certain  other  securities  named  in  the  statute,  said 
bonds  01'  securities  not  to  be  received  or  held  at  a  rate  above  par,  but  if 
their  market  value  is  less  than  par  they  shall  not  be  held  above  their 
actual  market  value.  Tlie  fund  so  deposited  shall  be  primarily  liable  for 
the  obligations  of  the  company  in  the  above-mentioned  fiduciary  capaci- 
ties. This  fund  must  never  be  less  than  one-half  the  annual  premiums 
r.nd  compensations  earned  by  the  company  in  trust  capacities  during 
the  previous  year;  it  must  be  increased  each  year,  if  necessary,  to  meet 
this  requirement. 

Trust  companies  are  under  the  supervision  of  the  Bank  Commissioner, 
to  whom  they  must  make  at  least  four  reports  each  year,  on  his  call ;  and 
by  whom  they  are  to  be  examined  at  least  twice  a  year. 

The  State  Banking  Board,  which  is  composed  of  the  Governor,  Lieu- 
tenant Governor,  President  of  the  Board  of  Agriculture,  State  Treasurer 
and  State  Auditor,  has  the  supervision  and  management  of  the  "Deposi- 
tor's Guaranty  Fund."  To  provide  this  fund,  the  Board  levies  against 
the  capital  of  every  bank  and  trust  company  organized  under  the  laws 
of  the  State  an  assessment  of  one  per  centum  of  the  average  deposits, 
less  deposits  of  United  States  and  State  funds  otherwise  secured,  for 
the  preceding  year.  Each  year  a  statement  must  be  rendered  to  the 
Bank  Commissioner  of  average  deposits  for  the  preceding  year,  accom- 
panied by  a  remittance  for  the  added  amount,  if  any,  needed  to  bring  the 
assessment  up  to  the  required  one  per  centum  of  average  deposits.  If 
for  any  cause  a  company's  guaranty  fund  becomes  depleted,  the  State 
Banking  Board  levies  a  special  assessment  to  cover  the  deficiency.  New 
companies  deposit  three  per  centum  of  their  capital  in  the  guaranty 
fund,  such  deposit  being  subject  to  re-adjustment  on  the  basis  of  average 
deposits  after  the  end  of  their  first  year  of  business.  The  Bank  Commis- 
sioner delivers  to  each  company  complying  with  the  above  provisions  a 
certificate  stating  the  fact  of  such  compliance  and  that  its  deposits  are 
guaranteed  by  the  fund.  This  is  to  be  conspicuously  displayed  in  the 
office,  and  may  be  used  on  stationery  and  advertising  matter.  When  a 
company  fails  or  quits  business  for  anj'  reason,  voluntarily  or  involun- 
tarily, the  Bank  Commissioner  may  take  possession  to  wind  up  its  affairs. 
The  depositors  shall  be  paid  in  full,  and  if  the  company's  available  cash 
is  insufficient  for  the  purpose,  the  Banking  Board  shall  draw  from  the 
guaranty  fund.  The  State  has  for  the  benefit  of  the  guaranty  fund  a 
first  lien  upon  the  company's  assets  and  upon  all  liabilities  against  stock- 
holders, officers  and  directors  and  all  others. 

(Wilson's  Revised  and  Annotated  Statutes,  1903,  chapter  18,  article 
14,  sections  1119-11.S5.  Laws  of  1905,  chapter  10,  article  3.  Laws  of 
1908,  H.  B.  No.  615,  approved  May  26,  1908.) 


STATE   AND   TEHIUTORIAI.   LAWS.  141 

Orkcjon. 

Section  7  of  the  general,  banking  law  of  1907  says  that  any  person, 
firm  or  corporation  (except  National  Banks)  having  a  place  of  business 
within  the  State  "where  credits  are  opened  by  the  deposit  or  collection 
of  money  or  currency  or  negotiable  paper  subject  to  be  paid  or  remitted 
upon  draft,  receipt,  check  or  order,  shall  be  regarded  as  a  bank  or 
banker,  and  as  doing  a  banking  business  under  the  provisions  of  this  act." 
Trust  companies  which  do  a  banking  business  as  thus  defined  are  there- 
fore banks  in  the  meaning  of  the  law,  and  are  .so  treated  elsewhere  in 
the  statutes.  The  use  of  the  names  "bank"  and  "trust  company"  is  for- 
bidden except  to  companies  comjilying  with  the  act.  jirovided,  that  the 
term  "trust  company"  may  be  used  "wliere  th«^  busin«s.-,  transacted  is  in 
no  sense  a  banking  business  a.s  defined  in  section  7  of  this  .\ct";  and 
such  a  concern  is  not.  governed  by  this  act. 

Banks  nmst  be  governed  by  a  board  of  three  or  more  directors.  The 
capital  required,  of  which  at  least  fifty  per  centimi  must  be  paid  before 
conuneneing  business,  is  $10,000  in  villages  of  a  popubition  of  less  than 
1,000,  if'-ij.OOO  in  towns  of  from  1,000  to  2,000.  $.30,000  in  towns  of  from 
2,000  to  5,000,  and  $50,000  in  larger  places.  They  may  hold  only  such 
real  estate  as  is  necessary  for  the  conduct  of  tlie  business  (and  this  nmst 
not  exceed  fifty  per  centum  of  the  capital,  surplus  and  undivided  profits), 
sjch  as  is  taken  in  satisfaction  of  debts  previously  contracted,  and  such 
as  is  purchased  at  sales  under  judgments,  etc.  This  does  not  apply, 
however,  to  trust  funds  or  estates.  The  directors,  each  of  whom  nmst 
own  at  least  $.500  par  value  of  stock,  must  meet  at  least  once  every  three 
months,  "and  shall  at  such  times  examine  tlie  loans,  paper  and  securities 
of  the  bank  and  its  liabilities  and  resources  of  every  kind."  The  re- 
sults of  the  examinations  must  be  spread  upon  the  minutes.  Before  the 
declaration  of  a  dividend  one-tenth  of  the  profits  must  be  carried  to  sur- 
plus until  the  same  is  equal  to  twenty  per  centum  of  the  capital.  Minors 
and  otlier  persons  under  disability  may  control  tlieir  own  deposits.  The 
bank  may  pay  the  balance  of  a  joint  account  to  the  survivor.  It  is  not 
liable  for  the  payment  of  a  raised  or  forged  cheek  unless  the  de{>ositor 
notifies  it  of  the  forgery  within  thirty  days  after  his  checks  have  been 
returned  to  him.  Loans  to  one  party,  except  bona  fiiie  discounts  and 
secured  loans,  are  limited  to  twenty-five  per  centum  of  the  capital  and 
surplus;  and  secured  loans  may  not  be  for  amounts  of  more  than  fit'ty 
per  centum  of  the  value  of  real  estate  or  seventy-five  per  centum  of  the 
value  of  commercial  paper  or  personal  property  securing  same.  Checks 
n»ay  not  be  certified  unless  the  drawer  has  the  funds  to  meet  them  on 
deposit,  and  such  checks  must  be  charged  at  once.  Loans  may  not  be 
made  to  officers  or  employees,  or  to  the  State  Bank  Examiner  or  his  em- 
ployees, unless  first  approved  by  a  majority  of  the  directors;  and  tin- 
action  of  the  latter  must  appear  upon  the  minutes.  If  such  loans  are  made 
in  a  dishonest  or  excessivf  manner,  or  incur  great  risk  or  loss  to  the  \y\nk. 


142  TRUST    COMPANIES. 

every  director  assenting  to  same  is  personally  liable.  The  reserve,  of 
uhich  one-third  must  be  in  cash  in  the  vaults,  must  be,  in  cities  of  less 
than  50,000  inhabitants,  fifteen  per  centum  of  demand  and  ten  per 
centum  of  time  liabilities;  and  in  cities  of  over  60,000  inhabitants, 
twenty-five  per  centum  of  demand  and  ten  per  centum  of  time  liabilities. 
All  banking  institutions  are  under  the  supervision  of  the  Board  of  Bank 
Commissioners,  consisting  of  the  Governor,  the  Secretary  of  State,  and 
the  State  Treasurer.  They  must  appoint  a  competent  examiner,  who 
shall  examine  each  company  whenever  he  thinks  it  necessary,  and  at 
least  once  a  year.  Reports  must  be  made  to  him,  of  a  form  prescribed 
by  him,  and  same  must  be  published  in  local  papers.  He  must  call  for 
these  reports  on  the  same  dates  that  the  Comptroller  calls  for  National 
Bank  statements. 

(Laws  of  1907,  chapters  135  and  138.     Also  see  chapter  '2(55.) 

PeNNSYI  VANIA. 

Although  this  State  contains  more  trust  companies  than  any  other,, 
and  rivals  New  York  in  the  early  development  of  such  corporations,  its 
statutes  relating  to  corporations  doing  the  business  of  a  trust  company 
are  in  need  of  revision  and  codification.  The  number  of  sections  of  the 
statutes  relating  to  trust  companies  by  name  is  very  small.  Most  of  the 
ordinary  powers  of  trust  companies  are  eninnerated  in  the  statutes  re- 
lating to  title   insurance   companies. 

The  specified  powers  of  such  companies  are:  To  do  a  title  insurance 
business;  to  receive  and  hold  on  deposit  and  in  trust  and  as  security, 
estate,  real  and  personal,  including  the  notes,  bonds  and  obligations  of 
States,  individuals,  companies  and  corporations,  and  the  same  to  pur- 
chase, collect,  adjust  and  settle,  sell  and  dispose  of  in  any  manner,  with- 
out proceeding  in  law  or  equity ;  provided,  that  nothing  herein  contained 
shall  authorize  said  companies  to  engage  in  the  business  of  banking;  to 
do  a  fidelity  insurance  business;  to  do  a  safe  deposit  business;  to  act  as 
assignees,  receivers,  guardians,  executors,  administrators,  "and  to  take 
and  receive  and  execute  trusts  of  every  description  not  inconsistent  with 
the  laws  of  this  State  or  of  the  United  States";  to  receive  deposits  of 
moneys,  and  to  issue  their  obligations  therefor;  to  invest  their  funds,  other 
than  funds  committed  to  their  care  by  the  orphan's  court,  in  and  to 
purchase  real  and  personal  securities ;  to  loan  money  on  real  or  personal 
security,  and  to  invest  funds  committed  to  their  care  by  the  orphan's 
court  in  such  securities  as  shall  be  approved  by  such  courts;  courts  into 
M'hich  moneys  are  paid  or  are  to  be  placed  by  order  or  judgment,  may 
direct  same  to  be  deposited  with  any  such  corporation;  to  act  as  fiscal 
or  transfer  agent  or  registrar;  to  become  sole  surety  in  any  case  where, 
by  law,  one  or  more  sureties  may  be  required  for  the  faithful  perform- 
ance of  any  trust  or  duty;  to  hold  any  and  all  such  pieces  of  real  prop- 
erty as  may  be  the  subject  of  any  insurance  made  by  such  companies 
under  the  powers  conferred  by  their  charters,  and  the  same  to  dispose  of 


STATE   AND   TERRITORIAJ.   LAWS.  143 

in  any  manner  they  see  proper;  "to  purehase  and  !,ell  real  t  state  and  take 
charge  of  the  same";  to  become  security  for  the  faithful  performance 
of  duty  in  several  cases  specified  and  to  beeome  security  for  other  pur- 
poses named  in  the  statute;  provided  that  before  exercising  any  of  the 
above-mentioned  powers,  such  corporations  shall  have  a  paid-up  capital 
of  not  less  than  $1^5,000.  When  acting  in  fiduciary  capaciti«s  the  cap- 
ital of  such  comjjanies  shall  be  taken  as  the  security  requind  by  law  for 
the  faithful  performr.nce  of  duty,  and  shall  be  absolutely  liable  in  case 
of  default.  Persons  holding  fiduciary  appointments  may  deposit  the 
securities  or  other  valuables  for  safe  k<<  |)ing  witli  such  companies. 
Courts  making  fiduciary  a})pointinents  to  such  companies  may  have  the 
companies  examined.  Trust  funds  and  investments  must  Ik-  kept  separate 
from  the  assets  of  the  company,  and  investments  made  by  the  company 
as  fiduciary  must  be  so  designated  as  to  clearly  show  to  what  trust  they 
belong.  The  powers  of  doing  a  safe  deposit  business  and  of  acting  ai 
fiscal  or  transfer  agent  or  registrar  are  given  to  all  companies  incor- 
porated under  the  laws  of  the  Commonwealth  "which  are  by  their  charters 
authorized  to  act  as  trustees,  receivers,  assignees,  guardians  and  commit- 
tees." Such  companies  may  increase  tluir  capital  stock  to  an  amount 
not  exceeding  .$2,000,000. 

Previous  to  18?.'?  trust  companies  in  the  State  were  incorporated  by 
special  acts  of  the  Legislature,  but  the  constitution  of  that  year  forbade 
such  special  charters  in  the  future.  No  provision  for  the  incorporation 
of  such  companies  under  general  law  was  made  until   1881. 

Trust  companies  are  under  the  supervision  of  the  Commissioner  of 
Banking.  They  must  render  to  him  not  less  than  two  reports  each  year, 
according  to  the  form  prescribed  by  him,  and  within  five  days  (unless 
he  extends  the  time)  after  the  receipt  of  a  request  therefor  from  him. 
He  may  also  call  for  special  reports.  Summaries  of  the  reports  must  be 
published  in  a  local  newspaper  at  least  three  times.  It  is  the  duty  of  the 
Commissioner  of  Banking  to  examine  such  companies  as  often  as  he  shall 
deem  projier.  If  unsafe  conditions  are  revealed,  he  must  notify  the  At- 
torney-General, who  shall  institute  proceedings  for  the  appointment  of 
a  receiver;  or,  if  the  conditions  seem  to  make  it  necessary,  the  Com- 
missioner may  appoint  a  temporary  receiver.  No  director  of  such  a  com- 
pany shall  receive  as  a  loan  an  amount  greater  than  ten  per  centum  of 
the  paid  capital  and  surplus;  and  the  gross  amount  loaned  to  all  officers 
and  directors  of  such  corporations,  including  concerns  in  which  they  are 
interested,  shall  not  exceed  twenty-five  per  centum  of  the  paid  capital 
and  surplus.  Such  companies  may  not  loan  on  their  own  stock:  nor  shall 
they  purehase  same,  unless  to  prevent  loss  on  a  debt  previously  contract- 
ed in  good  faith,  in  which  case  the  stock  so  jmrchased  shall  not  Ik*  held 
for  a  longer  period  than  six  months,  "if  the  same  can  Ik-  sold  for  what 
such  stock  cost  the  corporation."  It  is  a  misdemeanor  punishable  by  a 
fine  not  exceeding  -1=1,^)0  and  imprisonment  not  exceeding  two  years,  or 
both,  for  any  director,  officer  or  employee  of  a  bank,  trust  company  or 


144  TRUST    COMPANIES. 

building  and  loan  association  to  make  a  false  statement  or  entry  on  the 
books  or  to  subscribe  to  or  exhibit  same  with  intent  to  deceive,  or  to 
wilfully  or  knowingly  subscribe  to  a  false  report.  All  such  corporations 
must  furnish  a  receipt  in  full,  by  pass-book  or  otherwise,  for  all  moneys 
received  as  deposits  or  otherwise.  The  reports  must  set  out  in  full  the 
aggregate  of  these  liabilities,  which  must  not  be  concealed  for  any  pur- 
pose. If  the  company  borrows  money  the  amount  must  be  set  out  in  full 
on  the  books  and  in  all  reports  required  by  law.  It  is  also  illegal  to 
conceal  any  assets.  Violations  of  these  provisions  constitute  a  misde- 
meanor. For  purposes  of  taxation,  trust  companies  must  render  an  an- 
nual report  on  or  before  June  20,  stating  the  number  of  shares  of  the 
company  outstanding,  their  actual  value,  etc. 

The  reserve  requirements,  which  apply  to  all  State  banks,  Savings 
banks  and  Trust  Companies,  are  as  follows:  If  the  company  receives  de- 
posits subject  to  or  paj^able  on  demand,  it  must  keep  a  reserve  of  15  per 
centum  of  the  aggregate  of  all  immediate  demand  liabilities.  If  the  com- 
pany receives  time  deposits  "payable  at  some  future  time",  it  must  keep 
a  reserve  of  7^  per  centum  of  all  time  deposits.  One-third  of  the  reserve 
must  be  in  cash;  one-third  may  be  in  certain  specified  bonds;  the  bal- 
ance may  be  on  deposit  in  any  bank  or  trust  company  in  Pennsylvania 
approved  by  the  Commissioner  of  Banking,  or  in  companies  in  reserve 
cities  in  other  States  approved  by  him. 

Trust  companies  may  renew  or  extend  their  charters  for  a  period  of 
twenty  years  on  complying  with  the  provisions  of  the  law  of  May  10, 
1889. 

(Laws  of  June  11,  1885,  §§  1,  2,  3;  May  9,  1889,  §  1 ;  May  10,  1889, 
§  1;  Feb.  11,  1895,  §§  1,  2,  7,  9;  May  29,  1905;  June  24,  1895, 
§  1,  June  26,  1895;  June  27,  1895,  §§  1,  2;  May  29,  1901;  June  14, 
1901;  April  21,  1903  [art.  162];  Acts  of  1905,  No.  131;  Acts  of  1907, 
Nos.  141,  150,  151,  512,  525.  The  Title  Insurance  Company  laws  are 
found  in  Pepper  and  Lewis's  Digest,  Vol.  3  [Supplement,  1894-97], 
chapter  12,  §§  90-109.) 

Rhode  Island. 

Trust  companies  in  this  State,  which  were  formerly  incorporated 
otdy  by  special  act  of  the  Legislature,  may  since  JNIay  26,  1908,  be  or- 
ganized under  the  general  banking  law  passed  on  that  date,  to  which  all 
trust  companies  in  the  State  must  conform.  Fifteen  or  more  persons, 
all  of  whom  must  be  citizens  of  the  State,  may  associate  for  the  purpose 
of  forming  a  trust  company.  The  incorporation  proceedings  are  detailed 
at  lengrh.  No  shares  of  stock  may  be  issued  until  their  par  value  has 
actually  been  paid  in  cash.  Branches  may  be  established  after  obtaining 
the  consent  of  the  Board  of  Bank  Incorporation.  None  but  regularly  in- 
corporated trust  companies  may  use  the  words  "trust  company"  in  signs, 
titles,  etc 


STATE  AND  TERRITORIAL  LAWS. 

The  powers  specified,  in  addition  to  ordinary  powers  of  corpori- 
tions,  are  to  receive  and  hold  moneys  in  trust  or  on  dt-posit;  to  allow 
interest  on  same;  to  make  such  loans  and  investments  as  are  not  pro- 
hibited by  this  act;  to  hold  on  deposit  moneys  or  to  receive  and  manage 
other  property  in  charge  of  extcutors,  administrators  and  other  lidu- 
oiaries,  who  are  released  from  liability  for  funds  or  other  property  so 
deposited;  to  do  a  safe  deposit  business;  to  act  as  executor,  adminis- 
trator, custodian,  conservator  or  guardian  of  any  estate,  giving  bond  in* 
the  same  manner  as  individuals  so  acting,  but  surety  on  such  bonds 
shall  not  be  required  except  upon  written  demand  of  a  person  pecuniar- 
ily interested;  to  act  as  assignee,  receiver:  to  accept  trusts  of  every 
description  committed  to  il  by  persons,  corporations  or  courts;  courts  are 
authorized  to  appoint  such  a  corporation  as  administrator,  custodian, 
gaardinn  (of  the  estate  only)  or  conservator,  except  that  they  may  not 
apjioint  it  administrator  or  r^ustodian  upon  tin-  estate  of  a  wife  dying 
intestate  unless  upon  petition  of  the  husl)an(l:  to  be  depositary  of  court 
funds. 

Trust  companies  are  required  to  deposit  with  the  Treasurer  of  the 
State,  in  cash  or  in  certain  specified  securities,  an  amount  equal  to 
twenty  per  centum  of  the  capital  as  security  additional  to  the  capital 
for  the  faithful  performance  of  trust  duties.  Substitutions  of  these 
securities  may  he  made,  and  the  income  goes  to  the  company  depositing 
them.  Banks  and  trust  companies  must  maintain  reserves  of  fifteen 
per  centum  of  aggregate  deposits,  of  which  two-fifths  must  Ix-  in  cash 
on  hand.  The  balance  may  l>e  on  deposit  with  authoriz»-d  reserve  agents. 
These  reserve  requirements  do  not  apply  to  the  funds  of  the  savings  or 
"participation"  department,  if  the  company  has  complied  with  the  law- 
relative  thereto,  which  requires  that  a  guaranty  fund  equal  to  five  per 
centum  of  the  savings  deposits  be  accumul.-itfd  by  st-tting  aside  fom  one- 
eighth  to  one-fourth  of  one  per  centum  of  the  net  profits  of  the  depart- 
ment each  year.  A  separate  savings  department  nmst  Ix*  maintained, 
whose  assets  are  not  subject  to  other  liabilities  of  the  company  until  sav- 
ings deposits  have  been  paid.  The  investments  permitted  to  this  depart- 
ment are  specified  at  great  length,  and  includr  nninicipal  bonds,  certain 
steam  and  electric  railroad  bonds,  certain  bank  stcx'ks,  loans  secured  by 
the  foregoing,  securities  and  notes  of  cerbiin  gas.  water,  electric  light  or 
power,  telephone,  railroad  or  street  railway  companies,  real  estate  mort- 
gages under  certain  limitations,  and   promissory  notes  under  limitations. 

Trust  companies  may  not  make  loans  for  the  repayment  of  which 
they  are  directly  or  contingently  liable;  or  loans  in  excess  of  twenty  per 
centum  of  the  capital,  surplus  and  i)rofits.  the  repayment  of  which  is  un- 
dertaken severally,  but  not  jointly,  by  two  or  more  individuals,  corpora- 
tions, firms  or  other  parties.  Loans  to  one  interest,  bona  fide  discounts 
excepted,  may  not  exceed  ten  per  centum  of  the  paid  capital  and  sur- 
plus, nor  in  any  event  thirty  per  centum  of  the  capital.  Overdrafts  by 
19 


146 


TRUST    COMPANIES. 


officers  or  employees  are  forbidden,  and  loans  to  them  must  first  h.       K 

Trust   companies   are   under   the   supervision    of    the    Bank    r  • 

sioner,  to  whom  thev  must  m-ike  «f  1.     ,  «  Commis- 

possible,  work  simultaneously  with  the  National  h.,.v  ■ 

(Laws  of  1008,  Chapter  1590,  passed  May  26,  ms)  '""'""• 

South  Carolina. 
CorporatL   Law       There  "re   fe  ^"^I'r'"*'^  ""^^^  '^^  ^"«^"-^« 

estate  only,  not  of  the  person)    trustee  for  th.^'   T        "    ^°^  *^' 

fe  ciiiy  oi   tne  above-mentioned  appointments    savp  fhaf  ^f  t-      4. 
onirfrt  L      *"'=/'""•*  considers  proper.    The  State  Bank  Examiner  is  re- 

r:vr=r:^re:- itt:r„;tr:;:f  tr-  -- 

No.  6^;r        '""'  ''°-  ''^  ^^"^  "'  "'°*'  '^"^'•'^  L-=  of  ^906, 
South  Dakota. 


STATE  AND  TERRITORIAL  LAWS.  U? 

$25,000  in  towns  of  less  tlian  10.000  inhabitants;  at  least  $50,000  in 
cities  of  from  10,000  to  25,000,  and  at  least  $100,000  in  larger  cities. 
It  must  be  divided  into  shares  of  $100  each,  and  must  all  be  paid  in  be- 
fore commencing  business.  The  stockholders  are  subject  to  double  liabil- 
ity. There  must  be  at  least  five  directors,  each  of  whom  must  own  five 
shares  of  stock,  and  a  majority  of  whom  must  be  residents  of  the  State. 
The  powers  specified  are  to  act  as  assignee  or  trustee  by  deed,  executor, 
guardian  or  trustee  by  will,  such  appointments  having  the  same  force  as 
in  the  appointment  of  natural  persons;  to  act  as  receiver,  assignee, 
guardian,  conservator,  executor,  administrator  or  other  trustee  bv  ap- 
pointment of  court;  the  appointment  as  guardian  or  conservator  shall  be 
of  the  estate  only,  not  of  the  person;  to  act  as  fiscal  agent,  transfer 
agent,  registrar,  trustee  under  bond  issues;  to  execute  trusts  and  powers 
"of  wh.-itevcr  nature  or  description"  not  in  eonfliet  with  the  laws,  re- 
ceived from  persons,  corporations,  courts  or  other  authority;  to  hold  and 
manage  in  trust  real  or  personal  property ;  to  act  as  agent  for  the  in- 
vestment of  moneys  in  real  or  personal  securities;  to  receive  moneys 
and  other  property,  real  or  personal  in  trust  and  to  allow  interest;  to 
deal  in  stocks,  bills  of  exchange,  bonds,  mortgages,  notes  and  other  se- 
curities; to  loan  on  real  or  personal  security;  but  the  total  loans  may  not 
exceed  ten  times  the  capital  and  surplus;  to  buy,  sell,  deal  in  and  handle 
real  estate,  but  the  amount  invested  in  real  estate  shall  not  exceed  one- 
half  the  paid  capital,  (this  does  not  apply  to  trust  funds  or  to  real 
estate  taken  in  satisfaction  of  debts,  but  real  estate  taken  as  last  men- 
tioned shall  not  be  held  more  than  two  years)  ;  to  receive  money  on  de- 
posit subject  to  cheek. 

Before  a  dividend  is  declared,  ten  per  centum  of  the  net  profits  must 
be  carried  to  surplus  until  the  latter  equals  SO  per  centum  of  the  capital. 
Before  undertaking  any  trust  the  company  must  execute  a  bond  in  favor 
of  the  State  in  a  penal  sum  equal  to  the  capital,  signed  by  at  least  three 
securities,  approved  by  and  deposited  with  the  Secretary  of  State;  the 
latter  has  the  discretion  of  accepting  a  surety  company  bond.  No  other 
bond  shall  be  required  of  the  company,  except  that  a  court  may  at  its 
discretion  require  more  security  if  the  value  of  an  estate  to  be  committed 
to  the  company's  care  exceeds  the  capital  and  surplus  by  more  than  three 
times.  No  loans  may  be  made  on  the  company's  own  stock  except  to  pre- 
vent loss  upon  debts  previously  contracted  in  good  faith,  in  which  case 
it  must  be  sold  within  six  months.  The  total  liability  to  the  company  of 
any  one  party  nuist  not  exceed  15  per  centum  of  the  capital  and  surplus, 
first  mortgages  on  prof)erty  worth  double  the  amount  loaned  being  ex- 
cepted. Trust  funds  must  be  kept  separat«'.  The  compensation  received 
by  the  company  must  not  exet  ed  that  allowtd  to  natural  persons  for  like 
services. 

A  reserve  must  be  maintained,  of  10  per  centum  of  time  and  25  per 
centum  of  demand  deposits ;  on  hand  in  cash  or  on  deposit  in  solvent  banks. 
The   Public    Examiner   must    call    at    least    four    reports   each   year,    ac- 


148  TRUST    COMPANIES. 

cording  to  a  form  prescribed  by  him,  as  of  past  days.  The  reports  must 
include  a  list  and  brief  description  of  the  trusts  and  of  the  amount  of 
real  and  personal  estate  held  under  the  same.  Special  reports  may  be 
called  and  all  reports  must  be  published  in  local  papers.  Each  company 
must  be  examined  at  least  once  a  year  by  the  Public  Examiner.  Title 
insurance,  surety  and  fidelity  insurance  companies  are  provided  for  by 
chapter  13,  Acts  of  1905. 

(Laws  of  1903,  chapter  79  [t^is  is  4204  and  4205  Grantham's  An- 
notated Statutes  1901].  See  also  Annotated  Statutes,  paragraph  3812. 
The  trust  company  law  is  found  in  chapter  74,  Laws  of  1905,  as  amend- 
ed by  chapter  109,  Laws  of  1907). 

Tennessee. 

Act  168  of  the  Acts  of  1883  provides  for  the  organization  of  banks, 
"said  banks  to  be  invested  with  authority,  if  the  banking  company  or 
corporation  so  chooses,  to  couple  with  the  ordinary  business  of  banking  a 
safe  deposit  and  trust  company."  Such  banks  must  have  five  or  more 
directors.  Their  powers  specified  are:  Ordinary  banking;  safe  deposit 
business;  to  guarantee  the  payment  of  bonds  and  mortgages;  to  do  a 
title  insurance  business,  and  "to  accept  and  execute  all  trusts  of  every 
name  and  kind  which  may,  with  its  consent,  be  imposed  upon  it  by  any 
person  or  corporation,  whether  the  trust  be  that  of  guardian,  executor, 
trustee,  the  committee  of  the  estate  of  a  non  compos  mentis,  or  any  other 
trust,  the  said  corporation  being  hereby  invested  with  the  power  to  act 
in  such  fiduciary  capacity  as  fully  as  if  the  corporation  were  a  person  in 
being."  Such  corporation  must  be  organized  like  other  corporations, 
and  must  publish  a  statement  in  a  local  newspaper  every  six  months. 
(Shannon's  Code,  1896,  §§  2090-2105). 

Chapter  44,  Acts  of  1901,  provides  that  trust  companies  must,  in 
July  and  January  of  each  year,  or  within  thirty  days  thereafter,  publish 
in  a  newspaper  in  the  county  a  statement  of  financial  condition  as  of 
June  30  and  December  31,  respectively,  next  preceding.  The  form  of 
this  statement  is  to  be  determined  by  the  Comptroller  of  the  State. 

Chapter  377,  Acts  of  1903,  makes  more  detailed  provisions  regarding 
trust  companies.  Banks  in  counties  of  population  from  sixty  to  ninety 
thousand,  organized  for  the  purpose  of  conducting  a  savings,  safe  de- 
posit and  trust  banking  business,  with  a  capital  of  $100,000  or  more, 
"may  be  appointed  to  accept  and  execute  trusts  and  agencies  of  any  kind 
and  character  whatsoever",  to  which  they  may  be  appointed  by  persons, 
corporations,  public  or  private,  or  executor,  administrator,  guardian  (of 
estates  only,  not  of  persons)  of  infants,  idiots,  lunatics  and  other  persons 
of  unsound  mind,  receiver,  commissioner,  assignee  or  trustee  for  any 
person,  firm,  association,  etc.,  attorney  in  fact  or  agent  for  the  transac- 
tion of  any  business,  management  or  sale  of  any  property  whatsoever, 
"in  the  same  manner  and  to  the  same  extent  as  natural  persons."  The 
capital  of  such  companies  shall  be  taken  as  the  security  for  faithful  per- 


STATE  AND  TERRITORIAL  LAWS.  119 

formance  of  duty  required  by  law,  and  no  other  security  need  be  re- 
quired, except  in  the  discretion  of  the  courts.  Such  corporations  may 
act  as  depositaries  for  public  funds  and  for  funds  in  chargr  of  persons 
acting  in  fiduciary  capacities. 

Trust  funds  must  not  be  included  in  the  assets  of  the  company. 
They  may  be  invested  in  bonds  of  the  United  States,  of  Tennessee  and 
the  other  States,  first  mortgage  bonds  of  any  railroad,  bonds  of  any 
county  or  municipal  corporation,  provided  such  bonds  be  worth  par  or 
more  and  have  regularly  paid  dividends  of  not  less  than  four  per  centum 
for  the  five  years  preceding,  or  in  first  mortgages  on  real  estate  ap- 
praised at  least  twice  the  amount  loaned  thereon,  such  mortgages  to  run 
for  not  more  than  ten  years.  The  designation  of  an  attorney  in  a  will, 
and  the  right  of  heirs  to  select  an  attorney  must  be  recognized.  When 
acting  as  guardian,  such  company  need  render  statements  only  every  two 
years,  instead  of  yearly,  as  is  required  of  natural  persons  so  acting. 
The  fees  which  may  be  charged  for  services  in  certain  fiduciarv  capaci- 
ties are  specified  in  the  statute. 

Texas. 

Five  or  more  persons  may  incorporate  a  "banking  and  trust  com- 
pany." Articles  of  agreement  must  be  filed  with  the  Secretary  of  State. 
The  corporation  may  not  continue  more  than  fifty  years. 

The  act  authorizes  the  establishment  of  banks  of  deposit  or  of  dis- 
count, or  both,  having  trust  powers.  The  powers  specified  are:  To  ex- 
ercise the  powers  of  banks  of  deposit  and  discount;  to  act  as  fiscal  agent 
of  corporations,  public  and  private;  to  act  as  transfer  agent  and  regis- 
trar; to  receive  deposits  of  trust  moneys,  securities  or  other  personal 
property ;  to  loan  money  on  real  or  per.sonal  securities ;  to  hold  such  re^l 
estate  as  is  needed  in  the  transaction  of  the  business,  and  such  as  is  ac- 
quired in  the  satisfaction  of  debts  due  the  company ;  but  the  latter  may 
be  retained  not  more  than  five  years;  to  act  as  trustee  under  any  mort- 
gage or  bond  issue,  "and  accept  and  execute  any  other  municipal  or 
corporate  trust  not  inconsistent  with  the  laws  of  this  State";  to  accept 
trusts  for  married  women  with  respect  to  their  separate  property,  and  to 
act  as  agents  in  the  management  of  same;  to  act  under  the  appointment 
of  court  as  guardian,  receiver  or  trustee  of  the  estate  of  any  minor,  the 
annual  income  of  which  shall  not  be  less  than  $100;  to  act  as  depository 
of  any  moneys  paid  into  court;  to  execute  any  legal  trusts  regarding  the 
management  of  estates  real  or  personal,  from  whatever  source  the  trust 
may  be  received;  to  manage  estates;  "to  purchase,  invest  in,  guarantee 
and  sell  stocks,  bills  of  exchange,  bonds  and  mortgages  and  other  se- 
curities"; to  issue  its  own  bonds  and  obligations;  to  act  as  executor,  as 
administrator,  as  guardian  of  any  infant,  insane  person,  idiot  or  habit- 
ual drunkard,  or  as  trustee  for  any  convict  in  the  penitentiary,  under 
appointment  of  court;  to  do  a  fidelity  insurance  business;  "provided,  this 


150  ■       TRUST    COMPANIES. 

act  shall  never  be  construed  as  authorizing  the  granting  of  a  trust  not 
lawful  as  between  individuals." 

The  capital  shall  be  not  less  than  $50,000  nor  more  than  $10,000,000. 
The  aifairs  of  the  corporation  shall  be  managed  by  a  board  of  directors 
not  less  than  five  nor  more  than  twenty-five  in  number;  elected  annually 
unless  the  number  exceeds  five,  in  which  case  they  are  to  be  divided  into 
three  classes  so  that  each  shall  serve  three  years,  one-third  retiring  each 
year. 

The  office  of  Superintendent  of  Banking  is  filled  by  the  Commission- 
er of  x^Lgriculture,  Insurance,  Statistics  and  Plistory,  who  is  authorized  to 
employ  clerks  and  examiners.  It  is  his  duty,  either  in  person  or  by  an 
examiner,,  to  visit  and  examine  every  trust  compan}'  in  the  State  once  per 
annum,  and  oftener  when  he  thinks  it  necessary.  The  expense  of  such 
examinations  is  borne  by  the  companies  examined,  according  to  a  schedule 
of  maximum  charges  outlined  in  the  statute.  Detailed  provision  for  pro- 
cedure to  enforce  the  authority  of  the  Superintendent  of  Banking  is 
made  in  the  statute.  In  case  he  finds  .a  trust  company  to  be  in  bad  con- 
dition or  to  ignore  his  instructions,  he  must  communicate  the  facts  to  the 
Attorney-General,  who  shall  institute  such  proceedings  as  the  nature  of 
the  case  may  require.  In  case  of  need,  the  Superintendent  of  Banking 
may  take  immediate  charge  of  the  company,  pending  the  appointment 
of  a  Receiver.  A  trust  company  may  place  itself  in  the  hands  of  the 
Superintendent  of  Banking  by  posting  notice,  and  a  voluntary  general 
assignment  is  forbidden. 

Reports  to  the  Superintendent,  in  a  form  prescribed  in  the  statute 
and  by  the  Superintendent,  must  be  made  upon  his  call  at  least  twice 
each  year,  and  oftener  at  his  discretion.  Such  statements  must  be  pub- 
lished in  a  local  newspaper,  and  must  be  posted  in  the  banking  house. 

Trust  comjianies  may  not  loan  to  any  one  individual,  company  or 
corporation  an  amount  greater  than  twenty-five  per  centum  of  the  capital 
stock;  or  of  the  capital  stock  and  surplus  if  the  latter  is  equal  to  or  in 
excess  of  fifty  per  centum  of  the  capital.  The  discount  of  bills  of  ex- 
change drawn  against  actualh'  existing  values  and  the  discount  of  paper 
upon  the  collateral  security  of  warehouse  receipts  covering  products  in 
store  under  certain  conditions,  are  not  considered  as  money  borrowed. 
Trust  companies  may  not  engage  in  trade  or  commerce.  The  directors 
may  declare  dividends,  if  earned,  every  six  months  or  oftener,  but  must 
first  set  aside  ten  per  centum  of  the  net  profits  to  a  surplus  fund,  until 
the  same  amounts  to  fifty  per  centum  of  the  capital. 

Funds  in  the  charge  of  trust  companies  may  be  invested  in  loans  se- 
cured by  real  estate  or  other  sufficient  collateral  security,  in  public  bonds 
of  the  United  States  or  of  this  State,  in  the  bonds  of  any  incorporated 
city  or  county  or  independent  school  district  in  this  State.  Such  cor- 
porations may  own  only  such  real  estate  as  is  required  for  the  transac- 
tion of  their  business,  and  such  as  is  acquired  in  the  collection  of  debts; 
but  the  latter  may  not  be  retained  more  than   five  years.     Stockholders 


STATK   AND  TERRITORIAL  LAWS.  151 

are  subject  to  double  liability.  The  books  and  records  of  such  corpora- 
lions  must  be  kept  open  for  the  inspection  of  all  persons  interested. 
Trust  companies  having  a  capital  of  at  least  $100,000,  and  making  a 
deposit  of  $50,000  with  the  State  Treasurer  shall  be  permitted  to  qualify 
as  guardian,  curator,  executor,  etc.,  without  giving  bond  as  such.  Such 
deposit  shall  consist  of  cash,  Treasury  notes  of  the  United  States,  or 
Governnient,  State,  county,  nniMieii)al  or  otli*  r  bond  or  bonds,  notes  or 
debentures,  secured  by  first  mortgagts  or  deeds  of  trust,  or  mortgages  or 
deeds  of  trust,  or  unincumbered  real  estate  in  the  State  worth  at  least 
double  the  amount  loaned  thereon,  or  such  other  first-class  securities  as 
the  Superintendent  of  Banking  may  approve.  This  deposit  shall  be 
primarily  liable  for  the  obligations  of  such  company  acting  in  fiduciary 
capacities,  "and  shall  not  be  liable  for  any  other  debt  or  obligation  of 
the  company  until  all  trust  liabilities  have  been  discharged." 

Trust  companies  already  in  existence  may  avail  themselves  of  the 
provisions  of  this  act,  provided  that  they  thereby  waive  the  powers 
granted  by  their  charters  and  derive  their  sole  powers  under  the  terras 
of  this  act.  Corporations  not  organized  under  this  act  are  forbidden  to 
use  the  words  "trust"  or  "trust  company"  in  their  titles;  except  that 
corporations  already  organized  and  authorized  to  use  such  terras  in  their 
titles  may  retain  same  by  using  thereafter  the  words  "without  banking 
privileges."  Foreign  corporations,  other  than  National  banks,  are  for- 
bidden to  do  a  business  of  banking  and  discount  in  this  State. 

Every  banking  corporation  is  required  to  maintain  a  reserve  of  at 
least  twenty-five  per  centum  of  the  aggregate  amount  of  its  demand  de- 
posits, ten  per  centum  of  which  is  to  be  actual  cash  in  the  bank.  The 
reserve  fund  or  any  part  thereof  may  be  kept  on  hand  or  on  demand  de- 
posit in  any  bank  or  banking  association  in  the  State  of  Texas  or  in  any 
bank,  banking  association  or  trust  company  in  another  State  approved 
by  the  Superintendent  of  Banking  and  having  a  paid-up  capital  of 
$50,000  or  more;  but  the  deposits  in  any  one  bank  or  trust  company  shall 
not  exceed  twenty  per  centum  of  the  total  deposits,  capital  and  surplus  of 
said  bank. 

(Laws  of  First  Called  Session,  19O0,  chapter  10  [page  489];  Laws 
of   1907,  chapter  37). 

Utah. 

"Loan,  trust  and  guaranty  association.s"  may  be  incorporated  by  three 
or  more  persons  in  the  same  manner  as  other  corporations  for  pecuniary 
profit;  and  are  governed  by  the  provisions  of  chapters  1  and  2,  title  ■i, 
concerning  corporations,  except  as  in  this  chaj)ter  otherwise  provided. 

Powers  specified:  To  do  a  title  insurance  business;  to  act  as  as- 
signees, agents,  receivers,  guardians  of  the  estates  of  minors  and  incom- 
petent persons,  to  act  as  executors  and  administrators;  "to  execute  trusts 
of  every  description  not  inconsistent  with  law";  to  become  sole  security 
in  cases  where  by  law  one  or  more  sureties  may  be  required;  "to  buy,  sell 


152  TRUST    COMPANIES. 

or  mortgage  real  estate  or  personal  property,  to  loan  money  on  real  es- 
tate security  or  otherwise,  to  sell  and  assign  mortgages  and  endorse  ne- 
gotiable instruments,  and  to  make,  execute  and  deliver  bonds,  promissory 
notes  and  bills  of  exchange" ;  to  receive  deposits  of  money ;  provided  that, 
if  such  associations  shall  receive  commercial  or  savings  deposits,  the 
liability  of  stockholders  and  the  restrictions  concerning  the  lending  of 
its  funds  shall  be  the  same  as  those  for  commercial  or  Savings  banks 
respectively;  to  act  as  security  for  the  faithful  performance  of  any 
contract;  to  do  a  fidelity  insurance  business;  but  nothing  in  this  chapter 
shall  be  construed  as  dispensing  with  the  approval  of  such  association 
as  security  by  the  court,  officer  or  individual  charged  by  law  with  the 
duty  of  approving  such  security.  "WTien  acting  under  fiduciary  appoint- 
ments the  capital  of  the  corporation  shall  be  held  as  security  for  the 
faithful  performance  of  duty,  and  no  bond  for  such  purpose  shall  be 
required  of  it.  The  capital^,  paid  up,  must  be  at  least  $25,000,  and  in 
cities  of  the  first  class  at  least  $100,000.  The  capital  must  be  kept  in 
money  on  hand,  or  on  deposit  in  solvent  banks,  or  invested  in  bonds  of 
the  United  States  or  of  this  State,  or  of  any  county,  municipality  or 
school  district  thereof,  or  in  first  mortgages  on  real  estate  situated  in 
Utah,  worth  at  least  twice  the  amount  loaned  thereon.  Such  corpora- 
tions are  under  the  same  provisions  regarding  reports  as  banking  cor- 
porations. They  must  make  to  the  Secretary  of  State  not  less  than  four 
reports  each  year,  according  to  the  form  prescribed  by  him,  and  on  his 
call.  The  Secretary  has  power  to  call  for  special  reports.  If  satisfied 
that  a  company  is  insolvent,  the  Secretary  may,  through  the  Attorney- 
General,  apply  to  the  district  court  for  the  appointment  of  a  receiver. 

(Statutes,  title  2,  chapter  6,  §§  423-130;  chapter  2,  §§  388-39U 
chapters  1   and  2,  passim;  Laws  of   1905,  chapter  75). 

Vermont. 

Trust  companies  are  incorporated  only  by  special  acts  of  the  Legis- 
lature. The  general  laws  regulating  and  restricting  trust  companies  are 
quite  numerous,  most  of  them  applying  to  Savings  banks  as  well  as  trust 
companies,  the  two  classes  of  institutions  being  placed  under  much  the 
same  regulations.  The  ofP.cers  must  be  sworn  to  the  faithful  perform- 
ance of  their  duties,  and  the  amount  of  bond  required  of  the  Treasurer 
is  specified  in  the  statutes.  Such  companies  must  make  an  annual  report 
as  of  June  30,  to  the  Inspector  of  Finance.  The  items  to  be  covered  in 
the  reports  are  set  forth  in  the  statutes,  and  are  very  full.  When  de- 
posits are  made  in  trust,  the  name  and  residence  of  the  person  for  whom 
the  deposit  is  made  must  be  disclosed.  Minors  are  entitled  to  control  of 
deposits  made  by  them.  Provision  is  made  for  the  report  of  all  accounts 
inactive  for  ten  years.  In  1  8.98,  and  every  fifth  year  thereafter,  the  pass 
books  must  be  called  in  and  be  verified  and  be  examined  by  an  outsider 
approved  by  the  Inspector  of  Finance.     No  investment  of  the  capital,  sur- 


STATE  AND   TERRITORIAL  LAWS.  153 

plus  and  deposits  may  be  made  in  mortgages,  except  in  first  mortgages 
on  unincumbered  real  estate  to  an  amount  not  greater  than  three-fifths 
of  the  cash  value  tliereof,  and  not  over  tMo-fifths  if  the  property  be  un- 
improved or  unproductive.  Not  less  than  one-sixth  of  the  amount  of 
such  mortgages  shall  be  upon  real  estate  in  this  State,  and  not  more  than 
eighty  per  centum  of  the  assets  shall  be  invested  in  mortgages;  provided 
that  not  more  than  sixty  per  centum  of  such  assets  shall  be  invested  in 
icortgages  on  real  estate  outside  of  this  State.  No  mortgage  investments 
may  be  made  except  on  the  written  approval  of  three  of  the  trustees  or 
of  the  members  of  the  board  of  investment.  Five  per  centum  of  the  de- 
posits may  be  invested  in  a  lot  and  building,  and  part  of  the  premises 
may  be  rented  for  revenue.  No  loans  or  investments  on  personal  security 
rcay  be  made  except  upon  at  least  two  approved  names,  not  less  than  two 
of  whom  reside  in  the  State  or  within  fifty  miles  of  the  office  of  the  com- 
pany, or  upon  notes  or  accepted  drafts  from  parties  without  the  State 
for  goods  manufactured  within  the  State  and  payable  to  parties  in  the 
State.  Such  loans  may  not  be  for  more  than  one  year.  Not  over  one- 
third  of  the  assets  may  be  invested  in  personal  securities.  The  statutes 
provide  that,  with  the  foregoing  exceptions,  deposits  may  be  invested 
"only  as  follows";  then  is  given  in  much  detail  a  list  of  securities,  which 
include  L^^nited  States  bonds,  municipal  bonds  of  specified  States,  Na- 
tional bank  stocks  in  certain  States  and  cities,  banks  and  trust  com- 
panies in  Vermont,  school  district  bonds  in  certain  States,  State  bonds, 
and  notes  with  any  of  the  foregoing  as  collateral.  But  the  company 
shall  not  hold,  either  as  investments  or  as  collateral,  more  than  ten  per 
centum  of  the  capital  of  any  one  bank,  nor  invest  more  than  ten  per 
centum  of  its  deposits  or  more  than  $35,000  of  its  deposits  in  the  stock 
of  any  one  bank.  And  all  such  investments  and  loans  may  not  exceed 
one- fourth  of  its  deposits.  It  shall  not  loan  to  any  one  person,  firm  or 
corporation  more  than  five  per  centum  of  its  deposits,  nor  more  than 
$30,000;  nor  shall  such  loans  be  greater  than  $10,000  until  the  deposits 
equal  $1,000,000;  after  which  the  loans  may  be  increased  one  per 
centum  of  the  deposits  in  excess  of  $1,000,000.  "But  this  section  shall, 
not  apply  to  L-nited  States  bonds  or  municipal  bonds,  or  to  notes  with 
such  bonds  as  collateral."  No  loans  may  be  made  to  officers,  directors  or 
employees  without  the  written  consent  of  a  majority  of  the  directors, 
and  then  not  to  an  amount  greater  than  five  per  centum  of  the  paid  cap- 
ital, bona  fide  discounts  and  loans  on  certain  specified  collateral  ex- 
cepted.    The  comjiany  may  not  loan  on  its  own  stock  as  collateral. 

The  stockholders  are  subject  to  double  liability.  Trust  companies 
may  deposit  on  calls  with  banks,  banking  associations  or  trust  companies 
in  Vermont,  or  in  New  York,  Boston,  Chicago,  Albany,  Philadelphia  or 
Concord,  N.  H.,  or  in  any  other  legal  designated  depositary  under  tlie 
laws  of  the  L^nited  States,  or  in  National  banks  in  St.  Paul.  Minneapolis 
and  Kansas  City,  with  or  without  interest,  sums  not  exceeding  in  the  ag- 
gregate twenty  per  centum  of  their  assets.     They  may  hold  real  estate 


154  TRUST    COMPANIES. 

acquired  by  foreclosure  or  in  settlement  of  debts  due  them ;  but  such  real 
estate  must  be  sold  as  soon  as  a  reasonable  price  can  be  obtained,  and 
at  any  rate  within  five  years;  and  the  Inspector  of  Finance  may  at  any 
time  order  the  sale  within  ninety  days  of  particular  pieces  of  such  real 
estate.  The  Inspector  of  Finance  must  examine  such  companies  annually 
or  oftener.  If  the  Treasurer  or  a  Cashier  of  a  trust  company  is  also  an 
officer  of  a  National  bank,  or  if  the  latter  is  in  the  same  office  or  build- 
ing, the  Inspector  of  Finance  shall  examine  such  trust  company  annually 
at  the  same  time  as  the  United  States  Examiner  examines  the  National 
bank.  If  unsafe  conditions  are  revealed,  he  shall  proceed  against  the 
company  as  if  it  were  insolvent.  The  powers  and  restrictions  of  all  trust 
companies  are  enlarged  or  abridged  to  conform  to  this  chapter,  their 
charters  to  the  contrary  notwithstanding. 

A  trust  company  must  pay  to  the  State  Treasurer  in  semi-annual  in- 
stalments in  February  and  August,  a  tax  at  the  rate  of  seven-tenths  of 
one  per  centum  annually  upon  the  average  amount  of  its  deposits,  in- 
cluding money  or  securities  received  as  trustee  under  order  of  court  or 
otherwise,  deducting  therefrom  the  average  amount,  if  any,  of  its  capital 
and  accumulations  invested  in  United  States  bonds,  and  the  amount,  if 
any,  of  individual  deposits  in  excess  of  $2,000  each,  listed  to  the  deposit- 
ors in  towns  of  this  State  where  such  depositors  reside.  No  other  taxes 
shall  be  assessed  against  deposits  or  depositors  on  account  thereof,  ex- 
cept on  individual  deposits  exceeding  in  the  aggregate  $1,500. 

Any  trust  company  incorporated  in  this  State  may  act  as  adminis- 
trator, executor,  receiver,  assignee,  trustee,  guardian  of  any  person,  sub- 
ject to  guardianship,  "under  the  same  circumstances,  in  the  same 
manner,  and  subject  to  the  same  control  by  the  court  having  jurisdic- 
tion, as  in  the  case  of  a  natural  person  legally  qualified."  The  capital, 
surplus  and  stockholders'  liability  are  held  as  security  for  the  faithful 
performance  of  duties  of  this  character,  and  no  surety  shall  be  required 
upon  bonds  filed  by  the  company,  unless  required  by  the  court.  Trust 
property  and  moneys  must  be  kept  separate  from  the  assets  of  the  com- 
pany, and  are  not  liable  for  its  debts.  In  addition  to  the  examinations 
above-mentioned,  the  Inspector  of  .Finance  may  make  such  further  ex- 
aminations as  he  sees  fit,  and  must  make  them  when  requested  by  the 
court  having  jurisdiction. 

(Revised  Statutes,  1891,  §§  4067-41S1,  passirn;  §§  583  and  584. 
Acts  1896,  Nos.  17  and  80;  Acts  1900,  Nos.  53  and  54;  Acts  1902,  No. 
72;  Acts  1904,  Nos.  98  and  99;  Acts  1905,  No.  100;  Acts  1906,  Nos. 
28,  128  and  129). 

Virginia. 

Trust  companies  in  this  State  are  incorporated  by  special  acts  of  the 
Legislature,  the  special  charters  so  granted  specifying  their  powers  and 
limitations.  There  are  very  few  general  statutes  relating  to  such  com- 
panies, and  these  apply  mainly  to  foreign  companies.      "No   guaranty, 


STATE  AND  TERRITORIAL  LAWS.  15". 

trust,  indemnity,  fidelity  or  other  company,  liaving  for  its  |)urj)ose  to 
become  security  for  the  faithful  performance  of  any  trust  or  to  become 
fiduciary."  sliall  do  business  in  this  State  until  it  complies  M'ith  this  act. 
It  must  appoint  and  maintain  an  agent  residing  in  Richmond,  upon  wliom 
process  can  be  served.  Every  foreign  company  nuist  give  bond  to  the 
Auditor  of  Public  Accounts,  with  two  or  more  sureties  to  be  approved  by 
him,  in  a  sum  not  less  than  .i!I,()()0  nor  more  than  $j,()00,  with  conditions 
to  make  returns  and  pay  taxes.  Roth  foreign  and  domestic  companies 
shall  deliver,  under  oath,  to  the  Treasurer  of  State,  n  statement  of  the 
amount  of  the  capital  stock,  and  deposit  with  him  Ininds  of  the  State  of 
Virginia,  or  of  the  United  States,  or  bonds  of  the  cities  of  Richmond. 
Petersburg,  Lynchburg,  Norfolk.  Portsmouth.  Roanoke,  Alexandria. 
Danville  or  Newport  News,  to  an  amount  equal  to  five  per  centum  of  said 
capital,  assigned  to  him  in  trust;  but  the  cash  values  of  same  need  not 
be  greater  than  $'2.'5,0()(),  and  may  not  be  less  than  .*li..')()0.  The  com- 
pany gets  the  income  of  th«'se  securities  so  long  as  it  meets  its  trust 
obligations,  and  may  substitute  other  similar  securities  from  time  to 
time.  The  resident  agent  of  the  company  nuist  deposit  with  the  Auditor 
of  Public  Accounts  a  copy  of  the  company's  charter,  a  statement  of  its 
capital  and  manner  of  its  investment,  etc.,  and  must  annually  render  to 
him  a  statement  which  must  be  published  in  a  Richmond  newspaper. 
The  auditor  nmst  annually  examine  these  statements.  He  may  also  at 
any  time  examine  into  the  affairs  of  "any  company  incorporated  by,  or 
doing  business  in,  this  State."  If  unsafe  conditions  are  revealed,  he  may 
revoke  the  certificate  of  authority  issued  to  the  company,  and  publish 
such  action. 

(Code  1901,  title  18.  chapter  .k'5,  section   I'JSfic,  pages  ()lG-().')l ). 


Washington-. 

Three  or  more  persons  may  incorporate  a  trust  company.  The  name 
of  the  company  must  contain  the  word  "trust,"  and  other  corporations 
are  forbidden  to  use  the  word  in  their  titles.  Capital  required:  .■i<10,000 
in  towns  of  less  than  lOOO  inhabitants;  .*L*).0()0  in  towns  of  from  1000 
to  2000;  $20,000  in  towns  of  from  2000  to  3000;  $2r»,000  in  towns  of 
from  8000  to  oOOO;  $30,000  in  cities  of  from  5000  to  10,000;  $50,- 
000  in  cities  of  from  10,000  to  25.000;  $75,000  in  cities  of  from  25.000 
to  50.000;  $100,000  in  larger  cities.  Existing  companies  may  continue 
with  capital  required  under  the  old  law.  At  least  50  per  centum  of  the 
capital  nuist  be  i)aid  in  at  the  start  and  the  balance  at  the  rate  of  10 
per  centum  a  month  until  fully  paid.  .Stockholders  are  subject  to  d(»uble 
liability. 

The  holding  of  real  estate  is  limited  in  practically  the  same  way  as 
that  of  National  banks.  Such  as  is  not  needed  for  the  business  may  not 
be  held  as  an  asset  over  three  years.  Before  declaring  dividends,  one- 
tenth  of  the  net  profits  must  be  carried  to  surplus  utitil  the  latter  equals 


156  TRUST    COMPANIES. 

20  per  centum  of  the  capital.  Checks  may  not  be  certified  unless  the  nec- 
essary funds  arc  on  deposit.  Trust  companies  must  carry  a  reserve  of  20 
per  centum  of  demand  liabilities.  Payment  on  joint  accounts  of  not  over 
$300  may  be  made  to  either  party,  whether  the  other  is  alive  or  not.  In 
December  of  each  year  a  report  must  be  made  of  all  deposits  that  have 
been  unclaimed  for  ten  years,  unless  the  Secretary  or  Cashier  knows  the 
depositor  to  be  living. 

Powers  specified:  to  act  as  fiscal  or  transfer  agent  or  registrar,  and 
as  agent  for  any  corporation,  foreign  or  domestic,  for  any  purpose  re- 
quired by  statute  or  otherwise;  to  receive  deposits  of  trust  moneys,  se- 
curities and  other  personal  property  from  persons  or  corporations;  ta 
loan  money  on  real  or  personal  securities;  to  discount  and  negotiate 
promissory  notes,  drafts,  bills  of  exchange  and  other  evidences  of  debtj 
to  buy,  sell  and  exchange  coin  and  bullion;  to  hold  all  real  estate  neces- 
sary for,  and  convenient  in,  the  transaction  of  its  business,  or  which  the 
purposes  of  the  corporation  may  require,  and  such  as  is  required  in 
satisfaction  of  debts  due  to  it;  to  act  as  trustee  under  mortgages  and 
bond  issues,  "and  to  accept  and  execute  any  other  municipal  or  corporate 
trust  not  inconsistent  with  the  laws  of  this  State";  to  execute  trusts  for 
married  women  in  respect  to  their  separate  property,  and  to  act  as  agent 
in  the  management  of  same  or  in  business  relative  thereto;  to  act  as 
guardian,  receiver  or  trustee  of  the  estate  of  any  minor,  and  as  depositary 
of  any  moneys  paid  into  court;  to  execute  any  legal  trusts  and  powers 
regarding  the  management  of  any  estate,  real  or  personal,  confided  to  it 
by  any  court  of  record,  person,  corporation,  municipality  or  other  author- 
ity, and  to  hold  property  that  may  be  the  subject  of  any  such  trust;  to 
purchase,  invest  in  and  sell  stocks,  promissory  notes,  bills  of  exchange, 
bonds,  debentures  and  mortgages  and  other  securities;  to  issue  its  bonds 
or  obligations  for  money  borrowed  or  received  on  deposit  or  for  invest- 
ment; to  act  as  assignee  or  trustee  under  an  assignment,  or  as  receiver  ;^ 
to  act  as  executor,  trustee  under  will,  administrator,  or  guardian  of  the 
estate  of  lunatics,  idiots,  persons  of  unsound  mind  and  habitual  drunk- 
ards; to  do  a  safe  deposit  business;  to  do  a  title  insurance  business,  but 
not  if  the  company  does  a  banking  business ;  to  collect  income  on  securi- 
ties as  agent;  to  receive  and  manage  a  sinking  fund  for  any  corporation; 
"generally  to  execute  trusts  of  every  description  not  inconsistent  with 
the  laws  of  this  State  or  of  the  United  States";  to  receive  money  on  de- 
posit, subject  to  check  or  otherwise,  with  or  without  interest. 

The  affairs  of  every  such  corporation  shall  be  managed  by  a  board 
of  directors,  not  less  than  three  in  number,  each  of  whom  must  own  five 
shares  of  stock.  Trust  companies  may  not  loan  to  their  officers,  stock- 
holders or  employees  from  trust  funds,  and  any  loans  to  them  must  first 
be  approved  by  a  majority  of  the  directors  and  be  entered  on  the  rec- 
ords. Directors  who  knowingly  permit  a  violation  of  this  are  individually 
liable  for  damages.  Trust  companies  may  not  loan  on  the  security  of  their 
o"wn  stock,  nor  purchase  same  except  to  prevent  loss  on  a  debt  previously 


STATE   AND  TKRUITORIAI.   LAWS.  157 

contracted  in  jiood  faith.  Tlity  must  make  to  the  State  Examiner  not 
less  than  three  reports  each  year,  according  to  forms  which  may  be 
prescribed  by  him;  such  reports  to  be  rendered  as  of  past  day  specified 
by  th«'  Examiner,  which  days  shall  correspond  with  those  on  which 
national  bank  statements  are  called  for.  .\n  abstract  of  the  reports 
must  be  published  in  a  local  newspaper.  The  Examiner  may  call  for 
special  reports  at  his  discretion.  Trust  companies  are  subject  to  the 
inspection  and  supervision  of  the  State  Examiner,  and  it  is  his  duty  to 
examine  them  at  least  once  a  year  witliout  previous  notice.  W  unsafe 
conditions  are  found,  he  must  notify  the  Attorney-General,  and  may 
take  immediate  possession  of  the  company  pending  the  proceedings 
instituted  by  the  Attorney-General,  or  until  a  receiver  is  appointed. 
Deposits  made  by  minors  and  married  women  are  subject  to  their  control. 
(Pierce's  Washington  Code  1905,  §5;7225-7'255r,  7'i'26-7'226d.  Laws 
of  1907,  chapters  22,  37,  80,  126,  225.     Corporation  Laws,  5; ;j  19 1-2 10.) 

West  \'ikginia. 

Trust  companies  are  organized  according  to  provisions  of  the  general 
incorporation  laws,  and  governed  by  the  provisions  of  the  "Title  and 
Trust  Company"  law. 

Powers  specified:  To  do  a  title  insurance  business;  to  buy,  sell,  hold 
and  guarantee  bonds,  stocks,  loans  and  evidences  of  indebtedness,  and  to 
make  and  execute  contracts  and  agreements  required  therefor;  to  engage 
in  a  general  banking  business,  with  all  the  incidental  powers  necessary 
thereto;  as  to  such  banking  business,  trust  companies  are  subject  to  the 
banking  laws,  except  that  there  shall  be  no  limit  to  the  maximum  of 
paid-up  capital  that  such  companies  may  have;  to  do  a  safe  deposit 
business:  to  act  as  trustee,  assignee,  receiver  (general  or  special),  guard- 
ian, executor,  administrator,  special  connnissioner,  committee  or  curator; 
to  execute  trusts  of  every  description  not  inconsistent  with  the  constitu- 
tion of  this  State  or  of  the  United  Stat»'s;  to  receive  deposits  of  money 
or  other  personal  jiroperty.  and  issue  its  obligations  therefor;  to  invest 
its  funds  in  and  to  purchase  real  and  personal  securities,  and  to  loan 
money  on  real  and  personal  securities;  to  act  as  fiscal  or  transfer  agent 
or  registrar;  to  purchase  and  sell  or  take  charge  of  real  estate  for  other 
persons,  firms  or  corporations;  for  the  purpose  of  indemnifying  and 
saving  harmless  any  company  for  making  any  loans,  or  accommodations, 
such  company  is  authorized  to  receive  and  hold  on  deposit  and  in  trust, 
as  security,  estates,  real  and  })ersonal,  including  the  notes,  bonds  and 
obligations  of  States,  counties  or  municipal  corporations,  individuals, 
firms  or  corporations,  and  the  same  to  purchase,  collect  and  adjust,  set- 
tle and  dis))ose  of,  in  case  of  default  upon  any  note  or  obligation  for 
wiiich  such  pro))ertv  has  been  received  as  indemnity,  or  as  collateral 
securitv,  without  proceedings  at  law  or  in  equity.  Courts  appointing 
such  companies  to  trusts  may.  in  tiieir  discretion,  on  the  application  of 
any  persons  interested,  investigate  the  affairs  of  trust  companies  so  ap- 


158  TRUST    COMPANIES. 

pointed.  Trust  funds  and  investments  must  be  kept  separate  from  the 
assets  of  the  company,  and  all  investments  made  by  the  company  as 
fiduciary  must  be  so  designated  as  to  show  to  what  trusts  they  belong. 
The  capital  of  such  companies  shall  be  taken  and  considered  as  the 
sole  security  required  by  law  for  the  faithful  performance  of  duties  in 
trust  capacities;  provided,  that,  where  the  liability  of  the  company  in 
any  trust  capacity  equals  or  exceeds  the  capital  and  surplus,  the  court 
making  such  appointment,  or  order  or  decree,  shall  require  additional 
security. 

The  capital  of  such  companies  must  be  at  least  $100,000  fully  paid. 
Such  companies  shall  not  act  as  surety  on  bonds,  or  do  a  fidelity  insur- 
ance business,  except  as  above  specified. 

Institutions  not  regularly  organized  and  chartered  as  trust  companies 
are  forbidden  to  use  in  connection  with  their  business  the  term  "trust 
company."  Stockholders  are  subject  to  double  liability.  Every  director 
must  absolutel}^  own  at  least  five  shares  of  stock.  Trust  companies  are 
specifically  made  subject  to  the  banking  laws.  They  may  not  begin 
business  until  the}?^  have  obtained  a  certificate  of  authority  from  the 
Commissioner  of  Banking.  The  Commissioner  must  make  a  thorough 
examination  of  each  company  at  least  once  a  year.  Loans  may  not  be 
made  upon  the  security  of  the  company's  own  stock  to  an  amount  in 
excess  of  fifty  per  centum  of  the  capital,  nor  may  such  stock  be  purchased 
or  held  except  to  prevent  loss  upon  debts  previously  contracted  in  good 
faith;  and  in  the  latter  case  the  stock  must  be  sold  within  six  months. 
Loans  to  one  party,  except  bona  fide  discounts,  may  not  exceed  twenty 
per  centum  of  the  capital.  Before  the  declaration  of  a  dividend  one-tenth 
of  the  net  profits  must  be  carried  to  surplus  until  the  latter  equals  twenty 
per  centum  of  the  capital.  Lists  of  stockholders  with  their  addresses  and 
holdings  must  be  kept,  which  shall  be  open  to  inspection  during  business 
hours  by  all  stockholders,  creditors  and  by  the  State  tax  authorities.  A 
copy  of  this  list  shall  be  forwarded  to  the  Commissioner  on  the  first 
Monday  of  July  of  each  year.  All  companies  are  required  to  maintain 
a  reserve  of  fifteen  per  centum  of  all  deposits  subject  to  witlidrawal  on 
demand,  of  which  three-fifths  may  consist  of  balances  payable  on  de- 
mand due  from  any  national  or  State  bank  (including  trust  companies) 
in  the  State  or  any  solvent  banks  outside  the  State  that  may  be  approved 
by  the  supervisor  in  said  State. 

Reports  to  the  Commissioner  of  Banking  must  be  made  at  least  four 
times  a  year,  "corresponding  as  to  time  as  nearly  as  possible  to  the  calls 
made  by  the  Comptroller  of  the  Currency,"  according  to  forms  pre- 
scribed by  him,  and  such  reports  must  be  published  in  local  papers. 
Special  reports  may  be  called  for  and  special  examinations  may  be  made 
by  the  Commissioner  at  his  discretion. 

Foreign  trust  companies  may  do  business  in  the  State  by  complying 
with  certain  regulations  and  getting  a  certificate  of  authority  from  the 
Commissioner. 


STATE  AND  TERRITORIAI.  LAWS.  159 

(Acts  of  1901,  chapters  83  and  8.5;  Acts  of  1903,  chapter  7;  Acts  of 
]90.'5,  chapter  4^5;  Act  passed  February  19,  1907.) 

Wisconsin. 

P'ive  or  more  persons  may  incorporate  "as  a  trust,  annuity,  guar- 
anty, safe  deposit  and  security  coini)any."  All  hut  companies  regularly 
incorj^orated  for  the  purpose  arc  forhidden  to  use  the  words  "trust,  an- 
nuity or  guaranty  company"  in  titles,  or  other  words  designed  to  indi- 
cate that  they  do  a  trust  business.  Capital  rctpiired,  not  less  than  $50,- 
000  in  cities  of  less  than  1()0,()()()  population,  and  not  less  than  $100,000 
in  larger  cities.  Maximum  limit,  $."»,()0(),(H)().  Fifty  thousand  dollars 
must  be  paid  in  before  beginning  business,  and  the  balance  within  six 
months.  All  the  general  provisions  of  cha[)ters  H6  and  87  relating  to 
corporations  apply  to  such  .companies.  Within  six  months  after  begin- 
ning business,  such  companies  shall  deposit  with  the  State  Treasurer  not 
less  than  fifty  per  centum  of  the  capital  nor  more  than  $100,000  in 
amount.  Such  deposit  shall  be  in  cash,  bonds  or  mortgages,  or  notes 
and  mortgages  on  unineumlK-red  real  estate  within  this  State  worth 
double  the  amount  secured  thereliy,  or  public  stocks  and  l)onds  of  the 
United  States  or  of  any  State  of  the  United  States  that  has  not  de- 
faulted on  its  principal  or  interest  within  ten  years,  or  of  any  county, 
town,  village  or  city  in  this  State,  and  upon  all  which  Iwnds  and  other 
securities  there  shall  have  been  no  default  in  the  |)ayment  of  interest  or 
principal  for  a  longer  period  than  thirty  days.  The  securities  must  be 
approved  by  the  Commissioner  of  Banking.  This  deposit  shall  be  held 
as  security  for  the  depositors  and  creditors  of  said  corporation,  and  for 
the  faithful  performance  of  the  trusts  undertaken  by  it.  Other  securi- 
ties may  be  substituted  from  time  to  time;  and  the  company  shall  receive 
the  income  of  the  securities.  Such  comjianies  shall  In-  managed  by  a 
board  of  five  or  more  directors,  each  of  whom  must  own  ten  shares  of 
stock. 

Their  specified  powers  are:  to  receive,  hold  or  dispose  of  any  prop- 
erty, real  or  personal,  conveyed  to  them  upon  any  trust,  by  any  persons, 
including  married  women,  minors,  bodies  corporate  or  any  court,  and  to 
execute  any  trnsts  regarding  same;  to  act  as  agents  for  the  transaction 
of  business,  management  of  estates,  collection  of  income  or  principal, 
etc.;  to  act  as  registrar,  fiscal  or  transfer  agent;  to  act  as  executor,  ad- 
ministrator, trustee,  receiver,  assignee,  guardian  of  minors,  persons 
insane  or  incompetent,  lunatics,  or  any  persons  subject  to  guardianship; 
courts  are  authorized  to  make  such  appointments;  no  security  shall  be 
required  of  the  company  other  than  the  deposit  with  the  State,  except 
in  the  discretion  of  the  court;  to  loan  on  real  or  personal  security;  to 
do  a  safe  deposit  busin«ss;  to  act  as  surety  for  fiduciaries;  to  exercise 
all  of  the  powers  usually  exercised  by  trust  companies.  Such  companies 
are  forbidden  to  buy  or  sell  bank  exchange  or  do  a  banking  business. 
Married  wo)uen  and  minors  may  control  their  deposits.     Such  companies 


160  TRUST    COMPANIES. 

may  hold  real  estate  needed  to  carry  on  their  business  and  execute  trusts 
committed  to  them,  and  such  as  may  be  necessary  in  the  enforcement  of 
claims,  etc.  Trust  funds  may  be  invested  in  the  same  classes  of  securi- 
ties as  those  in  which  the  deposit  with  the  State  Treasurer  may  be  in- 
vested, or  in  such  real  or  personal  securities  as  the  directors  may  deem 
proper.  Trust  companies  must,  on  or  before  March  1  of  each  year,  pay 
to  the  State  Treasurer  a  license  fee  of  $300;  and  in  addition  a  tax  of 
two  per  centum  on  their  net  income  during  the  calendar  year  preceding. 
Such  payment  shall  be  in  lieu  of  all  other  taxes,  except  upon  real  estate 
owned  by  the  company.  Trust  companies  are  under  the  supervision  of 
the  State  Banking  Department,  to  whom  they  must  make  at  least  three 
reports  each  year.  The  reports  must  be  published  in  local  papers.  The 
Commissioner  of  Banking  must  examine  each  company  at  least  once  a 
j'ear.  If  the  company  is  connected  with  a.  national  bank,  the  examina- 
tion must,  if  possible,  be  held  at  the  same  time  that  the  examination  of 
the  national  bank  is  made  by  federal  authorities.  Any  officer,  director 
or  employee  who  makes  a  false  statement  or  a  false  entry  in  the  books 
or  knowingly  subscribes  to  or  exhibits  false  papers  with  intent  to  deceive 
llie  examiner,  or  who  publishes  a  false  report,  return  or  statement,  shall 
be  fined  from  $1,000  to  $5,000,  or  imprisoned  in  the  State  penitentiary 
from  one  to  ten  years,  or  both. 

(Sanborn  &  Berryman's  Wisconsin  Statutes,  Supplement  1906, 
^g    1791d-1791i5.      Laws  of   1905,   Chapter  504.) 

Wyoming. 

Loan  and  trust  companies  may  be  incorporated  by  five  or  more  per- 
sons. The  capital,  which  "must  be  subscribed  for  as  full-paid  stock," 
must  be  at  least  $10,000  in  towns  of  less  than  2,000  inhabitants;  at  least 
$25,000  in  towns  from  2,000  to  1,000  inhabitants;  at  least  $50,000  in 
towns  of  from  4,000  to  6,000  inhabitants;  and  at  least  $100,000  in  cities 
of  over  6,000  inhabitants.  Fifty  per  centum  of  the  capital  must  be  paid 
in  before  commencing  business,  and  the  balance  within  six  months.  The 
shares  must  be  $100  each. 

Powers  specified:  to  exercise  the  ordinary  powers  of  corporations;  to 
buy,  sell  and  discount  bills  of  exchange,  notes  and  all  other  evidences 
of  debt,  buy  and  sell  gold  and  silver  coin  and  bullion,  receive  deposits 
and  pa}^  out  same  either  upon  order  or  check;  to  "execute  any  trusts 
which  may  be  created  by  instruments  in  writing;  such  instrument  may 
appoint  such  association  trustee  for  am^  lawful  purpose,  and  to  act  as 
Mich  trustee  in  all  matters  embraced  in  such  trust;"  to  do  a  safe  deposit 
business;  to  collect  income  of  securities  left  for  safe  keeping;  to  execute 
and  issue  in  the  transaction  of  its  business  all  necessary  receipts,  bonds 
and  contracts.  Such  companies  may  hold  such  real  estate  as  is  necessary 
to  carry  on  their  business,  as  well  as  such  as  is  acquired  in  the  settle- 
ment of  claims.     The  board  of  directors  is  authorized  to  invest  the  capi- 


STATE   AND   TERKITOHIAL  LAWS.  l6l 

lal  and  sucli  money  as  is  receivt-d  from  persons  or  associations  for  in- 
vestment, "in  good  securities;  and  it  shall  be  lawful  for  such  association 
to  make  investments  of  its  capital  and  of  funds  accumulated  by  its  buai- 
ness,  and  moneys  received  from  other  persons  and  associations,  for  in- 
vestment as  aforesaid,  or  any  part  thereof,  in  bonds  and  mortgages  on 
unincumbered  real  estate  and  chattel  property  worth  at  least  double  the 
amount  loaned,  and  also  in  any  and  all  warrants  and  bonds  of  this  State 
or  any  other  State  or  Territory  or  of  the  United  States,  or  the  bonds 
and  warrants  of  any  county,  city,  town,  or  school  district  of  this  State 
legally  authorized  to  issue  such  warrants  or  bonds." 

Such  companies  must  maintain  a  reserve  of  twenty-five  per  centum 
of  their  liabilities  to  depositors,  which  reserve  shall  consist  of  cash  on 
hand  or  on  demand  deposit  with  State  or  National  banks  approved  by 
the  State  Examiner  as  reserve  agents.  Such  a  corporation  may  mortgage 
its  real  or  personal  property  and  pledge  or  hypothecate  its  notes,  mort- 
gages and  other  securities,  and  guarantee  payment  of  the  same,  to  per- 
sons or  corporations  furnishing  it  money.  Stockholders  are  subject  to 
double  liability.  A  section  of  the  statutes  which  forbade  such  companies 
to  receive  deposits  subject  to  check,  and  to  buy  commercial  paper,  etc., 
was  repealed  in  1903. 

(Revised  Statutes,  1899,  division  2,  title  4,  chapter  2,  §§  308.'),  3086, 
3128-3139-  Laws  of  1903,  page  59,  Act  of  February  20,  1903.  Laws 
of  1905,  chapter  78;  Laws  of  1907,  chapter  78.) 


CHAPTER  VI. 

ORGANIZATION  OF  THE  WORKING  FORCE. 

IT  is  difficult  to  find  two  trust  companies  the  scope  of  whose  business  is 
exactly  the  same ;  and  because  of  this  fact,  and  because  these  institu- 
tions are  still  in  the  formative  period,  the  plans  under  which  the  work- 
ing forces  of  trust  companies  are  organized  are  nearly  as  numerous  as  the 
companies  themselves.  There  is  some  variet}'^  in  the  titles  given  to  dif- 
ferent officers  and  employees,  and  great  variety  in  the  duties  which  such 
officers  and  employees  are  called  upon  to  perform.  It  is  therefore  quite 
out  of  the  question  to  treat  the  subject  as  one  might  write  of  banks, 
where  the  names  given  the  several  workers,  and  the  duties  which  they 
perform,  are,  within  certain  limits,  pretty  well  defined.  The  average 
trust  company  worker,  outside  of  the  banking  department,  is  usually 
called  upon  to  do  service  of  a  more  varied  nature  than  that  of  the  aver- 
age bank  employee. 

The  organization  of  the  working  force  depends,  in  the  first  instance,, 
upon  the  character  and  amount  of  the  company's  business.  If  it  is  prac- 
tically a  bank  operating  under  the  name  of  a  trust  company',  as  is  often 
the  case,  its  working  force  will  be  organized  in  a  manner  differing  little 
from  that  of  an  ordinary  bank.  Its  active  head,  where  the  President  or 
a  Vice-President  is  not  an  active  official,  is  apt  to  be  called  the  Secretary 
and  Treasurer,  or  the  Treasurer,  rather  than  the  Cashier;  although  the 
latter  title  is  frequently  used  in  the  South  and  in  the  West.  Where  the 
business  of  the  company  is  large  and  diversified,  requiring  a  considerable 
number  of  officers,  the  titles  most  commonly  given  are  President,  Vice- 
Presidents,  Treasurer,  Secretary  (or  Secretary  and-  Treasurer),  Assist- 
ant Secretaries  and  Assistant  Treasurers.  Among  other  titles  found  are 
Attorney,  Trust  Officer,  Auditor,  Advertising  Manager,  Manager  of  the 
Bond  Department,  Manager  of  the  Safe-Deposit  Department,  and 
Manager  of  the  Real  Estate  Department. 

Duties  of  the  Various  Officers. 

The  titles  given  trust  company'  officials  do  not  necessarily  convey  any 
idea  of  their  duties.  While  the  President  is  sometimes  the  active  head 
of  the  company,  he  is  more  often  not  active,  devoting  to  the  company's, 
affairs  only  so  much  time  as  is  necessary  to  preside  at  directors'  meet- 
ings, serve  on  certain  committees,  and  act  in  an  advisory  capacity.  In 
such  case,  the  active  management  devolves  sometimes  upon  a  Vice-Presi- 
dent, sometimes  upon  the  Treasurer,  occasionally  upon  the  Secretary,  but 
most  often  upon  the  Secretary  and  Treasurer.  Where  the  Secretary  and 
the  Treasurer  are  not  the  same  man,  the  duties  of  the  Treasurer  are  apt 
to  be  connected  with  the  banking  department,  and  those  of  the  Secretary 


ORGANIZATION  OF  WORKING    FORCE.  l68 

with  the  trust  department,  but  instances  are  numerous  where  no  attention 
is  paid  to  titles  in  the  assignment  of  the  duties  of  the  diflerent  officers. 
The  titles  of  other  officers,  like  that  of  Trust  Officer,  are  more  descrip- 
tive of  their  duties. 

The  accompanying  chart  is  designed  to  show  the  general  organiza- 
tion of  the  working  force  of  a  trust  company  doing  a  considerable  busi- 
ness in  trust,  banking  and  kindred  lines  of  business.  It  represent*  no 
particular  company,  but  the  attempt  has  been  made  to  incorporate  the 
arrangements  most  couunon  among  a  number  of  companies  examined,  the 
type  of  company  represented  Ix  ing  that  in  the  large  cities  of  the  .Middle 
States.  Of  course  the  various  lines  of  work  will  be  combined  so  as  to 
be  done  by  fewer  workers  if  the  company  be  smaller  than  the  one  for 
which  the  chart  is  designed,  and  will  be  distributed  among  more  workers 
if  the  company  be  larger.  The  assignment  of  r«sponsibilities  among  the 
Assistant  Secretaries  and  Treasurers  is  purely  arbitrary,  and  in  a  given 
company  may  be  quite  diff'erent  from  that  shown  in  the  chart;  such  as- 
signments usually  and  properly  depending  more  upon  the  personal  fit- 
ness and  experience  of  the  various  officers  than  upon  their  titles.  A 
newly-organized  company  is  apt  to  jiay  more  attention  to  the  relation- 
ship of  titles  and  duties  than  an  old  company,  where  the  diflerent  men 
have  groAvn  to  their  titles,  their  duties  having  been  well  established 
before  the  titles  were  given. 

Reading  horizontally,  the  arrangement  of  the  chart  is  designed  to 
show  the  superior  officer  to  whom  each  worker  is  responsible.  Reading 
vertically,  no  effort  has  been  made  to  show  the  relative  standing  of  the 
officers  and  employees.  Thus,  each  worker  in  the  column  beginning 
"Assistant  Treasurer"  is  responsible  directly  to  the  Secretary  and  Treas- 
urer. Reading  horizontally,  one  may  see  the  special  department  of  which 
each  officer  or  worker  is  in  charge,  and  the  various  employees  who  report 
directly  to  him.  The  question  as  to  which  of  the  under  officers  is  in 
direct  line  of  prouiotion  depends  upon  the  man  rath<  r  than  upon  the 
position. 

Whatever  title  be  givin  the  official  who  has  active  charge  of  the  com- 
pany, he  is  the  man  who  is  immediately  responsible  to  the  directors,  and 
through  them  to  the  stockholders,  for  the  general  conduct  of  the  institu- 
tion. Upon  his  shoulders  rests  the  general  supervision  of  the  aff"airs  of 
the  company;  to  hiui  the  lesser  officials  report,  and  under  his  general 
direction  they  administer  the  business  of  their  several  departments.  Mat- 
ters of  detail  arc  as  a  rule  not  brought  to  his  attention,  but  his  strength 
and  time  should  Ik  reserved  for  the  consid«ration  and  determination  of 
general  policies.  He  is,  of  cours« ,  the  one  upon  whom  rests  the  responsi- 
bility for  the  safe  and  profitable  investment  o{  the  funds  of  the  company 
and  of  the  funds  which  the  company  holds  in  trust.  Such  invtstments, 
however,  especially  those  of  trust  funds,  are  not  usually  made  upon  his 
sole  responsibility,  but  arc  determined  by  an  investment  committee,  of 
which  he  is  the  most  infiuential  member.  The  laws  of  many  of  the  SUtes 


164 


TRUST    COMPANIES. 


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ORdAMZATION   OF   WORKING    1  OIK  K.  l65 

prescribe  the  classes  of  investiiients  pcruiitted  for  trust  funds,  aiul  for 
the  general  funds  of  the  trust  companies;  and  within  the  limits  allowed 
by  law,  many  companies  by  by-law  or  resolution  of  the  board  of  di- 
rectors prescribe  the  classes  of  investments  in  which  their  different  funds 
shall  be  j)laced.  These  limitations,  if  wisely  made,  tend  towards  safety 
and  lessen  the  responsibility  of  the  chief  executive  of  the  company.  If 
unwisely  made,  their  effect  is  quite  the  reverse.  In  the  matter  of  loans, 
the  chief  executive  is  usually  the  man  who  decides,  but  the  loans  made 
arc  regularly  and  frequently  reported  to  the  finance  committee  or  execu- 
tive committee,  by  whom  large  loans  are  ordinarily  authorized  in  advance. 
TJiis  officer  is  responsible  for  the  records  of  the  directors'  meetings,  and 
of  the  meetings  of  the  executive  committee. 

In  a  large  institution  the  Secretary-Treasurer  will  hardly  have  lime 
and  strength  to  look  after  all  the  general  executive  work  of  the  com- 
pany, and  another  officer  is  apt  to  be  named  to  act  as  his  general  assist- 
ant. In  the  chart  this  officer  is  an  Assistant  Treasurer.  He  decides 
those  matters  of  general  management  with  which  he  thinks  it  unneces- 
sary to  trouble  the  Secretary-Treasurer.  He  has  charge  of  the  general 
correspondence,  himself  dictating  such  letters  as  he  sees  fit,  and  distrib- 
uting, through  an  office  boy,  the  other  letters  to  the  heads  of  the  various 
departments.  He  has  general  charge  of  the  loans,  carrying  out  the 
orders  of  the  executive  committee,  and  taking  a  varying  amount  of  re- 
sponsibility in  decisions  on  loans  of  small  amounts.  He  has  charge  of 
the  collaterals  given  for  loans,  and  of  the  investments  made  by  the  com- 
pany; a  frequent  arrangement  being  that  he  shall  have  access  to  the 
latter  only  in  company  with  another  officer  or  trusted  employee.  Upon 
him  rests  the  responsibility  of  seeing  that  coupons  and  other  forms  of 
income  on  investments  arc  collected  at  maturity.  He  ajiproves  and  in- 
itials expense  vouchers,  exercises  general  supervision  over  the  expendi- 
tures of  the  company,  and  places  orders  for  sup|)lies  needed  as  such 
needs  are  reported  to  him  by  the  Stores  Clerk. 

The  Loan  Clerk  has  direct  charge  of  the  details  involved  in  the 
handling  of  loans.  Through  his  window  he  meets  the  customers  whose 
a])i)lieations  for  loans  have  been  approved,  sees  that  tlieir  notes  are 
properly  made  out,  signed,  endorsed,  etc.;  that  they  arc  accompanied  by 
the  proper  collateral,  if  collateral  loans,  and  that  such  collateral  is  cor- 
rectly transferred  to  the  company:  and,  if  mortgage  loans,  that  the 
mortgage  is  in  corrtTt  form  and  accompanied  by  an  abstract  of  titli  or 
title  insurance  policy  correctly  describing  the  property  and  showing 
clear  title,  and  by  insurance  i)olicifs  properly  assigned,  if  needed.  He 
figures  interest,  seuds  notices  of  and  collects  same.  He  receives  jiaynu  nts 
on  loans,  either  partial  or  complete,  and  endorses  same  on  the  notes  oi 
cancels  and  delivers  the  notes.  He  keeps  records  showing  all  necessary 
information  regarding  the  loans,  including  the  balance  on  each  loan  and 
the  interest  payments.  He  keeps  line  cards  or  records,  sliowing  the  total 
loaned  on  each  particular  collateral,  and  keeps  track  of  daily  quotations 


166  TRUST    COMPANIES. 

on  stocks  and  bonds  held  as  collateral,  to  notify  his  superior  officer  if 
same  decline  in  price  to  an  extent  that  makes  them  poor  security  for  the 
loans.  He  receives  written  applications  for  loans  from  those  who  do  not 
see  an  officer  in  person  regarding  same.  Sometimes  he  is  given  a  limited 
amount  of  discretion  in  making  loans  to  designated  parties  within  sjjeci- 
fied  limits  or  upon  stated  collateral.  At  the  close  of  the  day,  or  at  con- 
venient times  during  the  day,  his  figures  are  turned  over  to  the  General 
Bookkeeper.  In  his  work  he  has  one  or  more  assistants,  including  a 
Stenographer. 

If  the  company  handles  discounts,  there  is  sometimes  a  Discount 
Clerk  who  looks  after  the  details  of  such  loans,  though  if  the  amount  be 
small,  such  loans  can  be  handled  by  the  Loan  Clerk. 

The  Stores  Clerk  is  in  charge  of  the  various  supplies,  books  and 
stationery  needed  by  the  employees  and  officers  of  the  company.  His 
duty  is  to  see  that  a  sufficient  supply  of  each  article  is  always  on  hand, 
which  requires,  of  course,  a  careful  system  of  keeping  track  of  the 
amounts  on  hand  of  the  different  articles.  Supplies  are  distributed  to 
the  different  workers  on  requisitions  initialed  by  the  Assistant  Treasurer, 
by  whom  also  orders  for  supplies  are  placed  as  their  need  is  reported  to 
him  by  the  Stores  Clerk.  In  a  large  company  the  value  of  the  supplies 
handled  by  this  clerk  in  a  year  amounts  to  a  good  many  thousands  of 
dollars.  This  clerk  is  sometimes  in  charge  of  the  expense  vouchers,  fill- 
ing out  the  vouchers  after  seeing  that  the  bills  are  correct,  handing  same 
to  the  Assistant  Treasurer  for  his  "O  K,"  and  sending  them  to  the 
payees.  He  keeps  an  expense  book  showing  the  distribution  of  expendi- 
tures. 

The  Mailing  Clerks  are  charged  with  the  duty  of  seeing  that  all  out- 
going mail  is  in  proper  shape:  that  each  letter  is  signed  and  enclosed  in 
the  proper  envelope  correcth'  addressed,  sealed,  stamped  and  placed  in 
the  post  office.  During  part  of  the  day  they  .are  assigned  to  special  tasks 
in  the  different  departments  of  the  company. 

An  Assistant  Treasurer  has  general  charge  of  the  banking  depart- 
ment, aside  from  the  loans.  Save  in  the  matter  of  loans,  his  duties  are 
much  the  same  as  those  of  the  Cashier  of  a  bank  so  far  as  the  super- 
vision of  the  practical  work  is  concerned.  He  sees  that  the  different 
workers  in  the  department  perform  their  work  satisfactorily;  keeps  track 
of  the  reserve  and  balances  with  correspondents;  meets  customers,  over- 
sees the  opening  of  new  accounts;  adjusts  differences;  attends  to  the 
correspondence  of  the  banking  department;  signs  drafts,  decides  ques- 
tions of  signatures,  overdrafts,  identification,  etc.,  and  looks  after  numer- 
ous other  matters  that  come  up  daily.  This  officer,  with  the  assistance 
of  the  Chief  Clerk,  is  usually  charged  with  the  duty  of  detailing  men  to 
fill  temporary  vacancies  due  to  sickness,  vacations,  etc.,  both  in  his  own 
and  other  departments.  The  banking  department  is  divided  into  two 
parts,  one  of  -which  handles  commercial  accounts,  and  the  other  savings 
accounts. 


ORGANIZATION  OI    WORKING  FORCE.  167 

The  Chief  Clerk  acts  as  general  assistant  in  the  banking  department. 
While  he  has  some  stated  duties,  his  time  is  largely  occupied  in  attrnding 
to  special  matters  assigned  to  him  from  time  to  time.  He  is  a  man  of 
all-around  ability  and  experience,  who  can  step  in  to  fill  any  position  in 
the  department  in  an  emergency.  He  looks  after  matters  of  detail  in 
the  relations  of  the  different  departments  one  with  another. 

The  General  Bookkeeper  keeps  the  grneral  books  of  the  banking 
department  and  the  records  of  in\e.stments,  and  also  acts  as  general 
bookkeeper  for  the  whole  institution  to  the  extent  of  recording  the  earn- 
ings and  expenses  of  the  several  departments.  Aside  fronj  these  items, 
eacli  department  keeps  its  own  books.  The  Cieneral  Bookkeeper  pre- 
pares the  daily  statement  and  reports  based  on  his  books,  which  together 
with  the  reports  of  the  other  departments  are  laiil  before  the  Secretary 
and  Treasurer  each  morning. 

The  Commercial  Receiving  Tellrrs  and  the  (  ommcrcial  Paying 
Tellers  ])erform  the  duties  usually  devolving  upon  such  workers,  receiv- 
ing deposits  and  paying  checks  for  customers,  and  attending  to  kindred 
duties.  One  of  the  Paying  Tellers  has  charge  o(  the  cash,  and  locks 
and  unlocks  the  safes  in  which  it  is  kept.  The  Savings  Receiving  Tellers 
and  the  Savings  Paying  Tellers  respectively  receive  deposits  from  and 
make  payments  to  the   holders  of  savings  pass-books. 

Progressive  trust  companies  have  separate  tellers  to  handle  the  busi- 
ness of  women  customers.  The  duties  of  these  tellers  are  the  same  as 
those  of  the  corresponding  tellers  in  the  men's  department. 

The  Draft  and  Collection  Teller  issues  drafts  on  New  York  and 
other  correspondents,  has  charge  of  collections,  and  makes  remittances 
for  the  company.  The  Collectors  work  under  his  direction,  receive  from 
him  each  morning  the  items  to  be  collected  for  the  day,  and  after  making 
their  rounds  hand  him  the  proceeds  of  paid  collections  and  return  those 
unpaid. 

The  Foreign  Exchange  Teller  issues  foreign  drafts,  travellers' 
checks  and  letters  of  credit.  If  the  business  in  this  line  be  small,  it  is 
attended  to  by  the  Draft  Teller:  while,  on  the  other  hand,  some  com- 
panies have  so  large  a  business  in  this  line  as  to  justify  the  maintenance 
of  a  separate  department,  with  several  employees. 

Many  companies  have  a  clerk  called  the  New  Accounts  Clerk,  who 
attends  to  the  details  of  opening  new  accounts,  under  the  direction  of 
the  officer  in  charge  of  the  department. 

The  Individual  Bookkeepers  keep  the  accounts  of  customers  in  the 
conunercial  department,  and  the  Savings  liookkctpers  thr  accounts  of 
customers  in  the  savings  department. 

The  Clearance  Clerks  have  charge  of  items  for  the  clearing-house, 
which  they  collect  from  tlie  various  tellers,  arrange  according  to  the 
banks  on  which  they  are  drawn,  and  take  to  the  clearing-house.  They 
also  bring  and  assist  in  looking  over  the  incoming  clearing.  They  usually 
work  under  the  direction  of  one  of  the  Tellers. 


168  TRUST    COMPANIES. 

The  remaining  employees  in  this  department  are  Stenographers; 
Messengers^  who  carry  money  and  securities  to  and  from  the  bank,  to 
express  offices  and  elsewhere;  Office  Boys,  who  run  errands,  file  letters 
and  attend  to  various  duties  assigned  to  them.  The  Janitor  and  the 
Porters,  though  having  to  do  with  the  whole  institution,  are  most  natu- 
rally classed  with  this  department.  The  Porters  stand  at  the  doors  to 
direct  customers  to  the  proper  offices  or  windows,  keep  a  watchful  eye  on 
persons  passing  in  and  out  of  the  bank,  and  are  on  hand  for  any  service 
demanded  of  them.  Frequently  the  same  persons  act  as  Porters  and  as 
Messengers. 

The  Work  of  the  Trust  Department. 

The  trust  department — which  is  semi-legal  in  the  character  of  its 
work,  and  which  is  the  department  of  specialties — is  divided  into  two 
sub-departments,  one  of  which  devotes  its  attention  to  trust  work  involv- 
ing the  affairs  of  corporations,  while  the  other  is  engaged  in  the  hand- 
ling of  estates  and  probate  business.  Some  companies  make  three  de- 
partments by  putting  the  work  of  transfer  agent  and  registrar  into  the 
hands  of  a  separate  department. 

One  Assistant  Secretary  has  charge  of  the  corporations  division  of 
the  trust  department.  If  not  a  lawyer,  he  must  at  least  have  thorough 
familiarity  with  so  much  of  commercial  law  as  concerns  his  work,  and 
he  freely  consults  the  company's  attorney  as  occasion  arises.  There  is 
great  variet}^  in  the  work  of  this  department,  and  the  duties  to  be  at- 
tended to  on  one  daj;-  or  week  may  be  of  a  character  quite  different  from 
those  of  the  succeeding  day  or  week.  Now  they  are  the  details  attendant 
upon  acting  as  trustee  under  a  bond  issue;  the  next  task  may  be  that  of 
acting  as  assignee  for  a  large  concern,  mercantile,  manufacturing,  bank- 
ing or  other ;  again  they  may  concern  the  re-financing  plans  of  a  corpora- 
tion, the  handling  of  a  bond  pool  or  syndicate,  the  collection  of  assess- 
ments, or  the  distribution  of  proceeds,  acting  as  depositary  under  escrow 
agreements,  the  duties  of  a  receiver,  acting  as  depositary  for  a  sinking 
fund,  depositary  of  stocks  under  voting  trust  agreements,  the  payment 
of  coupons,  the  transfer  and  registering  of  stocks  or  the  registering  of 
bonds,  and  so  on.  The  general  direction  of  these  and  similar  matters 
rests  upon  the  officer  in  charge  of  the  department.  A  Trust  Clerk  acts 
as  his  general  assistant,  handling  the  details,  figuring  assessments  and 
distributions,  keeping  the  department  tickler,  and  so  forth. 

The  Transfer  Clerk  attends  to  the  transfer  and  registering  of  stock 
certificates,  and  the  registering  of  bonds,  keeps  the  records  of  same, 
furnishes  certified  lists  of  stockholders  and  attends  to  such  other  matters 
as  occasion  demands. 

The  Cou^Don  Clerk  pays  coupons  as  they  mature  and  are  presented, 
cancels  and  arranges  and  keeps  a  record  of  them,  and  returns  them  with 
statements  at  regular  intervals  to  the  companies  concerned.  Sometimes 
he  has  charge  of  all  incoming  and  outgoing  registered  mail  and  express 


ORGANIZATION  OF  WORKING   FORCE.  l69 

matter  for  the  whole  institution  except  the  })anking  department,  attend- 
ing to  valuation  and  insurance  on  outgoing  matter  and  keeping  a  record 
of  same. 

The  Trust  Bookkeeper  keeps  the  records  of  the  department  and 
looks  after  such  special  duties  as  are  assigned  to  him. 

The  Stenographer  of  this  department  operates  a  book  typewriter, 
•with  which  he  makes  entries,  dictated  to  him  by  the  officer  in  charge, 
upon  the  trust  register  and   other  records. 

One  officer — perhaps  the  Trust  Officer  or  an  Assistant  Secretary — 
has  charge  of  that  division  of  the  trust  department  which  handles  estates 
and  probate  business.  Like  the  officer  in  charge  of  the  other  division  of 
the  trust  department,  he  needs  to  be  familiar  with  the  law  as  it  concerns 
the  work  of  his  department.  He  confers  with  customers  who  wish  to 
leave  property  in  trust  with  the  company,  or  to  aj)point  the  company 
agent  or  attorney-in-fact,  or  to  name  it  executor  or  trustee  under  will,  or 
trustee  under  agreements  relating  to  life  insurance,  or  who  wish  to  em- 
ploy the  company  to  act  for  them  in  any  capacity.  His  advice  is  sought 
and  freely  given  to  customers  on  various  matters  of  semi-legal  character 
regarding  their  estates.  He  has  general  charge  of  the  estates  in  the 
keeping  of  the  company,  looking  after  them  as  he  would  after  his  own 
property.  He  confers  with  heirs  and  beneficiaries  under  trusts  held  by 
the  company.  It  is  largely  through  this  department  that  the  trust  com- 
pany develops  that  peculiar  personal  character  that  distinguishes  it  from 
the  proverbial  "soulless  corporation."  As  guardian  of  the  estates  of 
minors  and  others,  and  in  other  capacities,  the  officer  in  charge  of  this 
department  is  often  called  upon  to  perform  duties  that  bring  him  into 
close  personal  touch  with   customers. 

It  is  a  part  of  the  duty  of  this  officer  to  see  that  trust  funds  in  the 
department  are  kept  invested  in  ways  that  are  safe  and  as  profitable  as 
safety  will  permit.  Such  investments  are  made  upon  the  advice,  either 
of  a  committee  existing  for  the  special  purpose,  or  of  the  executive  or 
finance  committee  of  the  company. 

In  some  companies  the  Trust  Officer  is  in  charge  of  the  whole  trust 
department,  the  subdivisions  of  such  department  being  under  the  charge 
of  assistant  trust  officers. 

An  Outside  Man  in  tliis  dt  partnitiit  looks  aft.  r  the  real  property  held 
in  trust,  rents  the  property,  pays  taxes,  attends  to  repairs  and  improve- 
ments, assists  in  the  negotiation  of  sales,  visits  courts  to  look  up  records 
and  legal  matters,  and  so  on. 

The  Bookkeeper  of  the  departntent  keeps  the  Ixioks,  in  which  a  sf  ji- 
arate  set  is  kept  for  each  trust,  as  well  as  general  figures  showing  the 
entire  work  of  the  department.  He  remits  income  to  the  beneficiaries  of 
the  various  trusts  as  same  is  received  or  at  stated  intervals,  has  charge  un- 
der the  Trust  Officer  of  the  securities  and  papers  belonging  to  each  trust, 
collects  coupons  and  other  forms  of  income  aside  from  the  rents  collected 
bv  the  Outside  Man,  collects  bonds  and  mortgages  as  they  mature,  keeps 


170  TRUST    COMPANIES. 

the  department  tickler,  renders  statements  to  the  courts  and  to  others  as 
required,  etc.  In  this  work  he  is  assisted  by  the  department  Stenograph- 
er, who  also  takes  dictation  and  attends  to  the  correspondence. 

The  Manager  of  the  Real  Estate  Department  conducts  for  the  com- 
pany a  general  real  estate  agency  business.  His  duties  are  similar  to 
those  of  an  ordinary  high-grade  real  estate  agent,  being  the  purchase  and 
sale  of  real  estate  and  the  renting  of  same,  acting  as  agent  in  the  hand- 
ling of  real  property,  the  collection  of  rents,  etc.  Sometimes,  with  the 
advice  of  the  executive  committee,  he  buys  property  for  the  company,  for 
the  purpose  of  turning  it  over  at  a  profit,  either  by  sale  in  bulk  or  in  al- 
lotments. Much  of  this  business  is  of  the  same  character  as  part  of  that 
done  in  the  estates  division  of  the  trust  department,  and  is  frequently 
handled  by  that  department,  extra  clerks  being  employed  as  needed. 

The  Safe-Deposit  Department. 

The  Safe-Deposit  Department  is  under  the  direct  charge  of  a  Man- 
ager. His  duties  involve  the  general  supervision  of  his  department,  but 
as  this  does  not  require  all  of  his  time  after  the  department  is  once  es- 
tablished and  put  in  running  order,  he  devotes  considerable  time  to  work- 
ing up  new  biisiness  and  to  seeing  that  his  department  is  kept  fully  up  to 
the  times. 

An  assistant  keeps  the  accounts,  makes  out  the  daily  reports  and 
assists  in  the  handling  of  customers.  He  has  charge  of  setting  the  time 
locks  and  opening  the  vaults.  In  the  absence  of  the  Manager,  he  rents 
boxes  and  space  in  the  vaults.  He  keeps  record  of  all  visits  made  by 
customers  to  the  vaults  or  boxes. 

A  guard  admits  customers  to  the  department,  keeps  his  eyes  open  and 
gives  general  assistance. 

In  large  companies,  a  trusty  man  is  needed  to  call  for  and  deliver 
packages.  Special  wagons,  either  automobiles  or  drawn  by  horses,  are 
provided  for  this  purpose  by  the  most  progressive  companies. 

A  Stenographer  in  the  department  takes  dictation  and  attends  to 
duties  specially  assigned. 

While  the  Night  Watchman  belongs  to  the  whole  institution,  his 
most  responsible  duties  are  in  connection  with  this  department. 

The  Manager  of  the  Bond  Department  is  engaged  in  the  investiga- 
tion, purchase  and  sale  of  municipal  bonds  and  other  high-grade  securi- 
ties, his  department  conducting  practically  the  same  business  as  a  first- 
class  bond  house.  He  needs  one  or  more  clerks  to  assist  in  the  work; 
but  as  his  department  is  in  close  touch  with  portions  of  the  trust  depart- 
ment, the  clerks  of  that  department  are  often  detailed  to  assist  him. 

The  Advertising  Manager  is,  as  his  title  indicates,  in  charge  of  the 
company's  advertising.  The  growth  of  the  idea  that  banks,  and  par- 
ticularly trust  companies,  may  with  dignity  advertise  and  "hustle"  for 
business,  has  been  phenomenal,  and  has  already  reached  the  point  where 


ORGANIZATION  OF   WORKINCi   FORCE.  171 

these  institutions  are  among  the  leading  advertisers.  Accordingly,  the 
Advertising  Manager  of  an  enterprising  company  has  an  important  mis- 
sion to  perform,  and  must  be  a  man  of  experience  in  his  line,  of  ideas  and 
of  industry  in  the  pursuit  of  new  and  attractive  ways  of  drawing  public 
attention  to  his  company.  In  his  work  he  has  the  assistance  of  several 
stenographers,  who  prepare  and  maintain  adxrrtising  lists  and  send  out 
advertising  matter. 

Many  companies  now  include  in  their  regular  force  an  Auditor,  who 
gives  his  time  to  auditing  all  departments,  preventing  or  detecting  de- 
falcations, seeing  that  the  orders  of  the  executive  otticers  as  to  methods  of 
work  are  carried  out,  suggesting  to  employees  improvements  in  their  work 
and  devising  improved  forms,  records  and  systems.  He  reports  directly 
to  the  chief  executive,  or  preferably  to  the  Board  of  Directors,  at  reg- 
ular intervals  and   whrncvt-r  occasion  demands. 

An  indispensable  official  in  a  trust  company  is  an  attorney,  or  tirui  of 
attorneys.  Sometimes  he  devotes  his  whole  time  to  the  company,  but  more 
often  there  is  a  working  agreement  by  which  his  services  are  at  the  dis- 
posal of  any  member  of  the  working  force,  officers  or  employees,  when- 
ever needed.  Some  companies  have  an  official  known  as  the  Office 
Attorney.  Unless  the  Trust  Officer  or  other  official  is  ah  experienced 
attorney  who  is  capable  of  passing  upon  legal  or  semi-legal  questions 
which  are  apt  to  arise  at  any  moment  in  the  work  of  the  trust  department, 
it  is  of  the  utmost  importance  to  have  a  competent  attorney  within  iisy 
reach.     The  duties  of  this  official  are,  of  course,  mainly  advisory. 


CHAPTER  ni. 


FOKMS  AND  BECOEDS  FOR  THE  TEUST  DEPAETMENT 

Ple,  clear  and  acc'urate  aslui  ,!.  '  '  ''"'''  °"S'"  '»  ""^  ""^  -"- 
-n,ark  applies  with  speeL,  f „  e  "  ,„  "  h;r„k:"T "  ""^.'^  '"™-  T"^" 
company,  and  especially  to  those  of  Tlstlf^  '  '"'™"''  "^  "^^  ""»' 
special  care,  because  of  the  fidue  a/v  lit;  rfTT™'-  '{"^  ''  "«^  "^ 
necessity  of  using  the  records  as  trfjl.  ""'''''«'"""=  °f 'lie 
beneficiaries  of  the  varies  tasts  and  t    th  '"""'"'  '^P"'^  '»  "» 

of  business  handled  in  trust  fo„th  t  '"'"•'''  ''^'^'"'^'=  "«  h-t"/ 

explanatory,  °'  "*''"'  ""S'"  '»  be  complete  and  self- 

The   wise   trust   department   manao-er   will    fhp„f 
provision  is  made  at  the  start  for  t,    l  1      *"efore   see   to    it   that 

the  golden  mean  between  the  two  ctt         """^  ''""^'  ">"'  ^^all  approach 
and  the  «nnecessarv   Lbor  anltime  /°^  «''"'  '"""^^^  "'  "irtail 

fullness  and  detail,"  retdnreitTi^r/T''  '^".'^•'•^-  -J  »'  '"o  ""le 
be  of  the  utmost  importanc^  of  i„  »^  """"™  "^  '''"^''  ">"*  "ay 

«.e  woru  of  suppiyii;r:ri;:d  Z:z:^ ""-'  '^^^  -"  "-^  - 
ea  Jurstd;*°t:;"h;;\:^tT:';iiw?r''\'^^""'^  '-«= ""-'»« "■"> 

The  records  will  be  inadeouate  if  ?r  /"'"'"'  "''  """'"'""'  ''"''■■' 
of  all  the  essential  rttTpertltJttr"?™'""  '  ™"P'^'=  '^'"'^ 
some  and  unwieldv  if  thev  eon  t  ^  .,  '""''  "''-^  "■'"  1"=  <^™bcr- 
Yet  it  is  safer  to  r  o,f  ^L  ,  jrofTo"  ■":  7  n  "'"""^  i"f"™ation. 
all.  and  it  is  better  for  tl  f  t  fo  thf  ^  "'  "  ""'  "'^''  "'  ^' 
for  details  which  the  inte    i.ent  L„U  "  *°  ™"'=""  '"''•"''  ^P""' 

particular  cases,  than  to  "  £  „o  „r„  ^'^  ^""^  """  "'  '"'  ^■^"^"°»  " 
careless,  lazy  »;  incon;;"™'  Zke;        "  '"  ''"''''  ^"^^  '^^'"'^  *»  '»^ 

f  Jtar':::„°d;^:f  ^^i;rous'^"";rt\"'  "-^  «''^'-'  '-p-"-- 

derstood  by  „„v  Ic"r'or  It  '^°,°'^\°"S''V°  '''  ''"P'"  '"°"?''  '"  ^e  u„- 
the  necessi  V  o^Z  e'  e"  elf      "T'''  "'  "''  ™"P--"'  -"^out 

b.v  costly  eipcrien^cet  ::czz::^'r!::.::::i:z:7' '''"-' 
itte;t7=was'lM "'  '-'-r  --'« "  -n '"i;:  iz 

could  interprtThn,",,  t  ^  ""^  '"  f'  """'''"''  "«'"^  '-'"''^•J'  -'» 
away  for  the  dav  V  '  ""'"'  '""^■''-    ™'="  ''"^  '"^  »"'  f-  l"nch  or 

simpkst  f  ts  r  i^di",,:::"""  1  "''^i' '"' '''""  "■  --^'-■>  '■- 


FORMS   FOR   TRUST   DEPARTMENT.  173 

met  with  l»y  many  companies,  and  there  is  a  distinct  trend  towards  sim- 
plicity by  the  older  institutions. 

Another  consideration  is  that  the  bookkeeper  on  any  particular  set  of 
books  may  at  any  time  meet  with  accident  or  sickness  which  n.ay  occasion 
liis  long  absence  or  death :  and  it  is  obviously  important  that  another  man 
be  able  to  take  his  place  without  the  necessity  of  a  long  course  of  train- 
ing, or  the  making  of  numerous  errors  in  starting  the  new  work. 

Win  re  it  can  Ik-  afforded,  it  is  of  decided  advantage  to  have  the  books 
specially  prepared  with  printed  headings  for  the  various  columns  and 
spaces.  To  the  man  who  works  on  the  books  daily,  these  headings  may 
seem  unnecessary;  he  knows  what  the  various  spaces  are  for  without  the 
labels.  But  it  is  not  enough  to  have  the  books  understood  by  the  man 
who  keeps  them;  they  must  be  readily  understandable  by  any  intelligent 
person,  so  tliat  the  oflicers  may  know  the  state  of  things  at  a  glance,  and 
so  that  a  new  man  may  take  up  the  work  at  any  time.  This  proposition 
seems  clear  enough  on  its  face,  yet  it  is  astonishing  how  litth-  it  is  he.-ded 
by  some  institutions. 

Because  of  the  frequent  reports  rerjuired,  it  is  of  great  advantage  to 
have  the  records  in  such  form  that  the  stenogra})her  may  copv  them  on 
the  typewriter  just  as  they  stand.  This  ))recaution  saves  a  great  amount 
of  work  and  many  errors. 

There  should  be  a  general  system  of  accounting,  of  which  each  book 
and  record  is  a  part,  and  through  all  of  them  should  run  a  chain  of  en- 
tries that  binds  them  together.  This  insures  accuracy  and  prevents  mani- 
pulation.    The  source  of  each  entry  should  be  readily  ascertainable. 

Some  companies,  especially  where  loose-leaf  books  are  used,  consider 
it  of  advantage  to  ha\e  all  leaves  of  the  same  size,  thus  insuring  uniform- 
ity in  the  sizes  oi"  all  the  books  afid  records.  This  adds  much  to  neatness 
and  general  ap})earance,  and  is  often  of  convenience.  If  this  is  done,  the 
size  should  be  large  enough  for  those  records  which  need  considerable 
space.  This  requires  making  some  records  larger  than  necessary,  but  the 
fault  is  not  a  bad  one.  The  size  used  by  one  of  the  Ix-st  companies  is 
15y^  inches  high  by  13%  inches  wide.  This  makes  a  book  of  convenient 
shape  and  size. 

Use  of  Loose-Lf.af  Books  and  C\rds. 

The  question  of  the  use  of  loose-leaf  lH>oks  and  records  is  one  on 
which  opinions  diller,  and  tlie  opinions  for  and  against  their  use  are  often 
quite  emphatic.  That  they  are  convenient  is  generally  conceded.  The 
essential  objection  urged  against  them  is  the  ease  with  which  leaves  may 
be  removed,  and  the  records  be  changed  or  the  leaves  be  lost.  This  objec- 
tion is  largely  removed  by  the  plan  of  having  the  keys  to  the  books  in 
the  sole  charge  of  one  official  or  trusted  clerk,  who  is  held  responsible  for 
any  irregularities  due  to  removal  of  leaves.  Where  there  is  objection  to 
the  general  use  of  loose-leaf  records,  they  may  be  used  only  on  ledgers 
and  other  secondary  books,  the  books  of  original  <-ntry  being  Uuind  in  the 


174  TRUST    COMPANIES. 

usual  way.  It  argues  much  for  the  convenience  and  safety  of  the  system'- 
that  few  cases  are  on  record  where  a  company  has  discarded  loose-leaf 
books  after  having  given  them  a  trial. 

The  use  of  card  records  is  open  to  much  the  same  objections  as  the 
loose-leaf  book,  and  its  advantages  are  of  the  same  kind,  but  more  pro- 
nounced where  adapted  to  the  needs.  The  use  of  cards  for  various  pur- 
poses is  steadily  growing,  and  in  many  institutions  has  entirely  displaced 
books  in  some  departments. 

Of  course  the  cash  and  securities  should  not  be  in  the  keeping  of  the 
ones  who  keep  the  records  concerning  them.  Audits  should  be  made  at 
frequent  and  irregular  intervals,  and  the  cash  and  securities  on  hand 
must  then  agree  with  the  amounts  called  for  on  the  books  kept  by  an- 
other. 

However  complete  and  carefully  arranged  the  set  of  books  may  be, 
the  matter  of  accuracy  and  care  in  their  keeping  depends  upon  the  men 
who  do  the  work  day  by  day.  The  books  of  tlie  trust  department  ought 
never,  even  for  a  day.  to  be  in  the  charge  of  novices  or  incompetents. 
The  best  bookkeepers  in  the  institution  ought  to  be  in  charge  of  these 
books.  They  ought  to  be  well  paid  and  well  treated.  This  is  done  in  most 
of  the  best-managed  institutions.  In  others  there  seems  to  be  a  lack  of 
appreciation  of  the  importance  of  such  work.  The  writer  knows  of  an  in- 
stance in  the  metropolis  of  the  country  where  an  unusually  competent 
and  painstaking  manager  of  the  book-keeping  department  was  informed 
that,  as  his  department  added  nothing  to  the  earnings  of  the  company,  its. 
expenses  must  be  kept  down  to  the  lowest  possible  figure !  The  shallow- 
ness of  such  an  argument  is  obvious  enough. 

The  number  and  kinds  of  books  needed  by  the  trust  department  de- 
pend upon  the  size  of  the  company  and  the  character  of  its  business. 
Trust  business  necessarily^  accumulates  slowly  and  usually  requires  years 
to  reach  considerable  proportions.  The  greater  part  of  the  business  of 
the  average  trust  company,  especially  of  the  small  and  the  new  ones,  is 
in  the  banking  department,  and  what  trust  records  are  necessary  may 
often  be  kept  in  the  general  ledger.  In  the  following  pages  will  be  given 
descriptions  of  the  books,  records  and  forms  required  by  companies 'doing 
considerable  trust  business.  Many  of  these  are  not  needed  at  all  by  the 
smaller  companies,  and  often  two  or  more  of  them  may  be  combined  in 
one  book.  There  is  such  variety  of  business  done  by  different  companies 
that  it  is  quite  impossible  to  devise  sets  of  books  applicable  to  all,  and 
each  company  is  under  the  necessity  of  devising  books  suited  to  its  in- 
dividual needs.  To  what  extent  it  is  desirable  to  discount  the  future  in  a 
new  company,  and  to  provide  at  once  sets  of  books  in  anticipation  of  a 
large  and  diversified  trust  business,  will  necessarily  depend  upon  the  in- 
dividual prospects  of  the  company. 

Relation  of  the  Trust  Books  to  the  General  Books. 

It  is  usual  for  the  trust  department  (or  departments)  to  keep  separate 
records  of  its  own  work.    For  its  cash  it  keeps  an  account  Avith  the  bank- 


FORMS  FOR  TRUST  DEPARTMENT.        175 

:ng  department  just  as  any  customer  would;  ,md  some  companies  keep 
bank  accounts  for  some  of  their  trust  funds  with  otlur  trust  companies  or 
banks.  Only  the  totals  of  such  accounts  appear  on  the  general  or  in- 
dividual books  of  the  company.  For  example,  if  at  any  time  the  trust  de- 
partment has  on  hand  $300,000  in  cash,  accumulated  or  awaiting  invest- 
ment, such  sum  appears  on  the  books  of  the  banking  department  as  a  de- 
posit to  the  credit  of  the  trust  department.  Regarding  the  details  of  this 
deposit  the  banking  department  has  no  more  to  do  than  with  the  details 
of  the  deposit  of  any  customer. 

The  Thist  REni^rKn. 

When  a  new  trust  is  taken  on  by  the  company,  the  first  hook  in  which 
record  needs  to  be  made  is  the  trust  register  or  register  of  trusts.  The 
purpose  of  this  book  is  to  give  a  list  of  the  trusts  held  by  the  company, 
together  with  a  concise  history  of  each  trust,  its  conditions,  etc.  Some  com- 
panies use  two  or  more  books  for  this  purpose,  keeping  trusts  received 


REGISTER   OF   TRUSTS. 

ni. 

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(7 

Fig.  1. 


through  the  probate  court  in  one  book,  and  other  trusts  in  .mother 
book.  Considerable  discussion  on  the  wisdom  of  this  course  was  brought 
out  at  the  meeting  of  the  Trust  Company  Section  of  the  American  Bank- 
ers' Association  at  Milwaukee  in  IpOl.'"  The  best  usage  seems  to  be  to 
have  but  one  trust  register  in  wliich  are  kejit  records  of  all  trusts,  from 
whatever  source. 

In  1900  a  con)mittec  was  apj>ointed  by  the  Trust  Company  Section  of 
ihc  American  Bankers'  Association  to  print  a  book  of  trust  company 
forms.  In  Fig.  1  is  given  the  register  of  trusts  recommended  by  this  com- 
mittee, with  sample  entries.  When  a  trust  is  received,  memorandum  of 
same  is  at  once  made  on  this  register,  and  the  trust  is  given  the  next 
consecutive  numlnr.  By  this  number  it  is  thereafter  known,  and  its 
papers  and  securities  are  filed  under  that  number.  This  is  not  onlv  a 
great  convenience  when  the  number  of  trusts  becomes  large,  but  is  a 
decided  safeguard  in  filing  documents.     It  becomes  of  special  importance. 


70  Proceedings   Trust    Company    Section 
pp.   22-27. 


Lmerican    Bankers"    Association,    1901, 


176  TRUST    COMPANIES. 

too,  when  more  than  one  trust  is  held  from  Ihe  same  party.  The  numbers 
also  show  the  order  in  which  the  trusts  were  received  and  the  total  number 
received  up  to  any  given  date.  It  does  not  show  the  number  of  open 
trusts,  as  many  may  be  closed. 

In  Fig.  1  the  first  column  is  for  the  number  of  the  trust.  The  second 
column  is  for  the  date  when  the  trust  was  opened.  Care  should  be  ex- 
ercised here — and  in  all  books — to  have  the  year,  as  well  as  the  month 
and  day,  correctly  and  plainly  indicated.  After  the  book  has  been  in  use 
for  a  term  of  years,  this  becomes  of  the  utmost  importance.  Young  book- 
keepers frequently  overlook  this. 

The  next  column,  headed  "name,"  is  for  the  name  in  which  the  trust 
stands. 

The  next  column,  headed  "character  of  trust,"  describes  briefly  the 
capacity  in  which  the  company  is  to  act,  or  the  general  nature  of  the  work 
undertaken  by  it. 

The  next  column,  headed  "source  of  appointment,"  shows  whether  the 
trust  was  received  by  appointment  of  court,  by  private  agreement,  or 
otherwise. 

These  are  all  the  entries  that  can  be  made  at  the  time  that  the  trust  is 
received.  In  cases  Avhere  an  inventory,  an  appraisement  and  a  proof  of 
publication  are  required,  the  dates  when  these  were  attended  to  are  in- 
serted in  the  proper  columns.  When  a  trust  is  closed,  entries  are  made  in 
the  next  columns  showing  the  date  when  closed,  and  the  authority  for 
such  closing. 

It  is  a  convenience  to  have  a  special  file,  called  the  "disposed  of  file/' 
for  trusts  which  are  closed,  so  that  the  live  trusts  can  be  kept  separate. 
The  last  section  of  Fig.  1,  headed  "trusts  closed,"  is  for  use  in  connection 
with  this  file.  At  a  convenient  time,  the  remaining  papers  of  closed  trusts 
are  placed  in  boxes  or  envelopes  in  this  file,  the  package  is  given  a  num- 
ber, which  is  inserted  in  the  last  column  in  the  register,  and  the  number 
of  the  trust  and  the  date  of  closing  are  inserted  in  the  columns  shown. 
Some  companies  do  not  give  new  numbers  to  closed  trusts,  but  file  same 
by  the  original  number,  which  is  probably  the  better  plan. 

There  should  be  an  alphabetical  index  to  the  register  of  trusts,  giving 
the  number  of  each  trust  and,  if  desired,  the  page  on  the  register  in  which 
it  is  entered.  The  regular  size  of  page  for  this  register  is  21  by  IS^/^ 
inches. 

It  will  be  seen  that  this  register  permits  of  only  a  meagre  record  of 
the  facts  regarding  each  trust.  It  serves  as  a  convenient  means  of  ke«p- 
ing  a  list  of  trusts  and  of  learning  at  a  glance  the  proper  number  to  give 
to  each  new  trust.  But  fuller  details  regarding  the  trusts  must  be 
written  out  elsewhere.  Some  companies  have  such  details  on  a  specially 
printed  page  inserted  in  the  loose-leaf  trust  ledger  at  the  beginning  of 
the  account  of  each  trust. 

Many  companies  dispense  with  the  use  of  this  form  of  trust  register 
entirely,  and  register  all  trusts   in  a  book  devised   on  quite  a  different 


FORMS  rOR  TRUST  DKPARTMKN" 


17 


plan.  In  the  book,  one  i)age  (or  more,  if  necessary)  is  given  to  each 
trust,  the  facts  regarding  the  trust  being  treated  at  greater  or  less  length, 
as  the  case  in  hand  may  require.  The  trusts  are  given  the  proper  con- 
secutive numbers  as  received,  the  same  as  in  the  brief  form  of  register. 
The  pages  are  either  ruled  across  like  an  ordinary  record  book  for  writ- 
ing, or  are  entirely  bl.nik  if  they  are  to  be  filled  in  with  a  book-typewriter. 
The  book  may  be  spteially  j)rinted,  but  unless  loose  leaves  are  used  it 
will  not  be  of  advantage  to  have  much  printing,  as  the  record  needed  for 
different  classes  of  trusts  varies  greatly.  In  any  event  the  matter  to  go 
in  the  trust  register  should  either  be  dictated  by  an  officer  or  inserted  by 
an  intelligent  clerk  who  is  thoroughly  familiar  with  the  work. 

Fig.  2  shows  a  page  for  such  a  register.  The  history  of  the  trust 
may  be  continued  on  the  other  side.  The  page  is  quadrille-ruled,  as  a 
conveiiitiu'e  in  tabulating  items  when  necessary.     Its  si/e  is  llxl.>  ineln>. 


.  The  Pearl  Street  Savings  and"  Trust  Company. 


T^IU-VJ 


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Fig.  2. — PxcE  of  Trl-st  Hecistkr. 


If  the  trust  business  is  large,  the  best  plan  is  to  use  a  loose-leaf  trust 
register,  with  pages  s])ecially  printed  for  different  classes  of  trusts  that 
are  common,  and  blank  pages  for  others.  As  each  trust  is  received,  the 
proper  kind  of  page  is  inserted,  and  the  next  consecutive  number  is  given 
to  the  trust. 

Figs.  3  and  4  show  two  different  pages  for  such  use;  and  the  page 
shown  in  Fig.  2  may  be  so  utilized. 

Fig.  S  gives  the  front  page  of  a  leaf  used  by  a  large  company  for 
the  registering  of  trust  deeds.  This  company  uses  a  book  typewriter, 
12 


178 


TRUST    COMPANIES. 


The  anlthvllle  £leetrlo  TraoUon 


..TOTAl  issue  >  SCO, 000.0 


im    1         Kro«    7/8/0 


July  s,  1902.      AcctniD  Bv  EXEC  con    July  2,  1902. 


J  BY  TIIUST  COA 


July  1,   1902. 


e»  Jereey. 

'"'E    jxay  1,  1902. 

snlthville. 


'"   Salthvllle.  couim  »«D  jtATt  sueaex,  New  Jereey. 

J5P      nouns.     Nos     1         to     500     mousnt     »iooO.OO    "«" 
'   Sew  York      °"    July  1,  1922.       "  Blanlt  Trust  Co. 


July  1,   1902. 


YorK 


Jan. 


July  1. 


BlemX  Trust  00. 


rranohle 


Nine  and  c.ie-fourth    mies  of  traoX,  wires,   etc.     Power 
houae  and  eight  aoree  »f  land,   oor,  8th  Ave.  and  17th  St.,   and  ©- 
qnlpnent  on  eaiue.       oar  barns  and  otiuljunent  and  five  aores  of  land, 
oor.   12th  A»e.  and  5Srd  St.  107  oars  with  motors,   etc.     Sundry 

property  per  description  In  deed.     All  located  in  Sueeej  Co.,   Jl.J. 


Sell  property.       See  trust  deed. 


intereet  nay  demand  aotlon 


pari  of  trustee.  See 


Fig.  3. 


with  which  the  entries  are  made,  as  shown  in  the  figure.  The  abbrevia- 
tion "Comp."  at  the  upper  left-hand  corner  refers  to  the  compensation 
received  by  the  company  for  its  services.  Most  of  the  entries  are  self- 
explanatory.  It  will  be  noticed  that  the  memoranda  opposite  the  head- 
ings, "in  case  of  default  trustee  may"  and  "in  case  of  default  bondhold- 
ers may"  are  not  extended.  The  utility  of  extended  memoranda  on  such 
points  is  doubtful.     If  action  is  to  be  taken  in  these  matters,  such  action 


FORMS  FOR  TRUST  DEPARTMENT.        179 

Tutix-flB-aoi 
TITLE ^jun^  U)clLc.^^(:^^ . 


*F«.  ^     >^f  Ito  rf7ir/i 


■»tt«<v«„.^  '>»^-»', ' 


•/0OO.«   h  A(f<^A.  rf  ^'vvtc-  ^r^w.    CiM.^    irw  -Cwl     4  G^Caa^ 


L)  LiiUx—v^*  C»T-t-v.-- 


& 


^Ljlu.^ 


OjuLuAt.  o/  aJLi^     0^. 


-n^. 


/fete   3,  i<(t«>.    CXUx-l-ivv,*.  ^ 

0^  ^i<»oa.  iiu^  ^<d  'dU<^f,^M^  i<r^(f*^  (f^  Xl^.^ 


Dnf«»«</   ry  Til*    /V#.    I3t 


Fig.  4. 


should  be  put  in  tlic  liands  of  the  attorney  of  the  company,  and  he  will 
not  be  content  with  less  than  a  study  of  the  trust  deed  itself.  Especially 
will  this  be  true  if  there  is  any  question  regarding  the  interpretation  of 
the  instrument.  It  is  a  safe  rule  never  to  put  into  the  trust  register  any 
memoranda  regarding  whose  correctness  there  might  be  the  least  question. 
The  blank  space  is  much  more  useful  than  such  a  memorandum,  and 
capable  of  less  damage. 

On  the  reverse  side  of  the  leaf  the  record  is  continued  with  tlie  fol- 
lowing headings:  "In  case  of  sale."  "liability  of  trustee,"  "sale  or  ex- 
change," "delivery  of  bonds." 


180  TRUST    COMPANIES. 

Fig.  4  shows  a  page  adapted  to  record  of  trusts  received  through  the 
probate  court.  The  first  part  calls  for  the  same  information  as  in  Fig.  1. 
Under  the  "list  of  property  in  trust,"  need  be  given  such  property  only 
as  is  not  itemized  on  the  trust  ledger.  Some  companies  put  into  the 
ledger  only  the  cash  in  the  trust;  others  add  the  securities  at  the  ap- 
praised value  and  some  at  the  face  value,  and  some  include  all  the  prop- 
erty in  the  trust,  items  of  uncertain  or  doubtful  value  being  listed  at  the 
nominal  appraisal  of  one  dollar.  The  last  plan  is  a  safeguard  against 
overlooking  any  item  of  the  trust  property.  If  this  plan  is  followed  the 
list  of  property  in  the  register  may  be  omitted. 

Under  the  head  of  "memoranda"  are  entered  any  special  remarks  re- 
garding the  terms  of  the  trust,  matters  to  be  attended  to  and,  if  desired, 
the  names  of  the  beneficiaries,  regular  remittances,  etc.  The  best  usage, 
however,  is  to  enter  the  latter  memoranda  on  a  page  preceding  the  ac- 
count in  the  trust  ledger,  as  will  be  described  later.  Indeed,  some  com- 
panies register  their  trusts  only  on  pages  (like  that  shown  in  Fig.  2,  or 
blank  pages)  which  are  inserted  in  the  trust  ledger,  thus  keeping  all 
memoranda  regarding  each  trust  in  one  place.  In  such  cases  a  numerical 
index  to  trusts  must  be  kept  in  a  separate  book. 

Under  "history"  should  be  given  a  complete  record  of  all  essential 
matters  in  the  administration  of  the  trust  down  to  the  time  of  its  final 
disposition.  The  careful  keeping  of  this  record  is  of  great  convenience 
and  importance.  It  should  contain  such  matters  as  important  conferences 
with  the  makers  or  beneficiaries  of  the  trust,  changes  in  the  written  agree- 
ment, death  of  interested  parties,  etc.  When  necessary  the  history  should 
be  continued  on  the  reverse  side  of  the  leaf. 

For  the  registering  of  trusts  for  which  neither  of  these  forms  is 
adapted,  blank  pages  should  be  used,  the  entries  to  be  dictated  by  the 
trust  officer  or  other  experienced  person.  It  is  convenient  to  have  these 
blank  pages  ruled  as  in  Fig.  2  or  Fig.  4.  A  convenient  size  for  these 
pages  for  use  in  a  loose-leaf  binder  is  15%  by  13%  inches. 

Fig.  5  gives  the  first  page  and  an  outline  of  the  other  pages  of  the 
form  used  by  another  large  company,  on  a  somewhat  diiferent  plan.  This 
form  is  made  of  card-board,  size  574  by  lO^/o  inches,  containing  eight 
pages   and  no  cover. 

At  the  top  of  the  second  page  is  the  heading  "terms  of  the  trust  and 
powers  of  trustee."  The  third  page  is  divided  into  three  equal  parts, 
with  the  headings  shown  in  Fig.  5.  The  fourth  page  is  headed  "history," 
and  this  is  to  be  continued  as  far  as  necessary  on  the  remaining  five 
pages.  These  forms  are  arranged  in  numerical  order  in  specially  pre- 
pared files,  which  contain  only  the  live  trusts,  the  forms  being  removed 
to  a  transfer  file  as  each  trust  is  closed  and  its  record  completed.  This 
plan  is  convenient  in  that  when  one  wishes  to  consult  the  record  of  a  given 
trust  he  may  remove  the  form  from  the  file,  and  have  the  record  in  com- 
pact and  convenient  shape  without  the  handling  of  a  large  book,  and 
without  interfering  with  the  work  on  other  trusts.     It  requires  care  lest  a 


FORMS  FOR  TRUST  DHPARTMENT, 


•Hie  Union  ThusT  Company. 


-^itt 


-GtJA/v±: 


AFPOINTED- 


[Page  2J 
Ki:.MS  Oh    THE  TRUST  AND   POW- 
ERS OF  TRUSTEE 


•[Page   3] 

BENEFICIARIES     AND     TllKli;     IN- 

TERESTS 


TBDBT  CR£AT£0  BT. 


C^.'^AAJbrru- 


-U^_.d^_.a:i. 


.VUif^ 


THrST  TERMXNATES "  I  l<&  {  0  ^-^    (TT  ^M^y^f^ 

ACCOC^T  HCST  BE  FUXI) 


PROPERTY.       WIIK.N       AND      FROM 
WHAT    SOURCE    RECEIVED 


EXECUTORY   INTERESTS    AND  EX- 
PECTANCIES 


-M^UritCM 


.lh4.QjL- 


COMPENSATION  ^yUu^t-^-^nA.AXuJLe^ 
IXIM9ER  NO— ?-n 


IP^'KC    I] 
HISTORY 


a  record  be  lost  or  misplaced.  Where  such  records  arc  used,  it  is  a  good 
plan  to  have  printed  forms  of  receipts,  one  of  which  the  person  taking 
the  form  signs  and  puts  in  the  jilace  from  which  the  form  is  removed, 
thus  showing  who  is  responsible  for  that  particular  document  until  it  is 
replaced. 

Some  companies  use  a  probate  settlement  docket,  the  standard  form 
of  which  is  shown  in  Fig.  6.  The  headings  and  sample  entries  are  self- 
explanatory.  This  book  is  indexed  for  months,  and  thus  serves  as  a 
tickler  to  show  settlements  due  each  month  on  this  particular  class  of 
trusts.  All  probate  trusts  are  here  entered,  so  that  the  book  contains  a 
complete  record  of  settlements  of  such  trusts. 


182 


TRUST    COMPANIES. 


The  use  of  this  docket  is  of  course  unnecessary  if  the  large  form  of 
trust  register  is  adopted,  and  a  suitable  general  trust  tickler  used,  as  all 
the  information  here  contained,  and  more,  is  easily  recorded  on  the 
register.  It  is  of  advantage  where,  for  any  reason,  it  is  deemed  im- 
portant to  keep  such  memoranda  regarding  probate  trusts  separate  from 
those  of  trusts  received  from  other  sources. 

It  should  be  said  that  there  is  great  difference  in  the  ways  in  which 
various  companies  use  their  trust  registers.  Some  make  the  memoranda 
exceedingly  brief,  depending  upon  reference  to  the  papers  in  the  trust  at 
frequent  intervals.  Others  have  lengthy  entries  made,  even  copying  wills 
and  other  documents  in  full.  In  favor  of  this  practice  it  is  urged  that 
many  trusts,  especially  as  trustee  under  wills,  may  last  for  twenty  or 
thirty  years,  during  which  time  the  documents  may  become  misplaced  or 
worn  by  constant  usage.  In  case  of  the  loss  of  the  original  paper  the 
verbatim  copy  becomes  invaluable. 


PS®»aTE  SETTUEMEMT  DOCKET. 

^,.™.. 

«,„..^«.c,«r. 

^SiT^I^ 

».njK£ 

toUTfc. 

■n^irti.. 

5rttl.,„,nt 

"""vVuTr"^ 

-—   1 

J/.^C&aA^..^. 

-iUi,:^,^ 

-Jia    4;  /,„-* 

■huA  »,  19^  f 

e^4e.(a^    ;  w 

Fig.  G. 


Journals  and  Ledgers. 


The  book  of  original  entry  for  all  transactions  in  the  Trust  Depart- 
ment involving  cash  is  the  General  Journal  of  the  Trust  Department. 
This  book  is  really,  in  its  main  usage,  simply  a  cash-book;  but  usage 
differs  in  the  matter  of  arranging  the  debits  and  credits  as  for  a  cash- 
book  or  as  for  a  journal.  The  ordinary  journal  form  suffices  for  the 
work,  and  for  small  companies  is  not  only  cheaper  than  specially-ruled 
books,  but  is  also  quite  as  convenient.  Most  of  the  larger  companies, 
however,  use  specially-ruled  books;  the  chief  purpose  of  the  rulings, 
aside  from  the  matter  of  appearance,  being  to  separate  different  classes 
of  accounts.  Figure  7  represents  a  Trust  Journal,  or  rather  Cash-Book, 
arranged  with  separate  columns  for  the  accounts  of  "Bond  Trusts,"  of 
"Court  Trusts"  and  of  "Sundry  Trusts."  The  company  which  uses  this 
book  conducts  all  its  trust  work  through  one  department,  but  maintains 
three  trust  ledgers — one  containing  the  accounts  of  bond  trusts  (i.  e., 
trusts  in  which  the  company  acts  as  trustee  under  bond  mortgages,  in- 
volving the  payment  of  coupons  and  of  bonds  when  due),  another  con- 
taining the  accounts  of  court  trusts  (i.  e.,  trusts  received  by  appointment 
of  court),  and  the  third  containing  the  accounts  of  all  other  trusts  for 


FORMS   FOR  TRUST  DEPARTMENT. 


183 


The  Qnardiaii  Saviocs  and  Trest  Coopaay.  TRUST  OEPAJtTMCKT 

DtB.T  C*iM  RtctiMO  JjLf.r-j:j9^ 


ImtLjUjLAeui  fi^. 

tuuj  1*4 h.  juJHAMJcLmn/    fid 

(J  sttkuJL 


Vjr^ 


JJ. 


^+ 


Tig. 


.y'fJ-I^Ulam.        .      .       . 

OffvjA,    ^  (J 

IpAoJuruAy 
— L^:^-l•-H.\^•u  Page  of  GtsEaAL  TarsT  Joihxai.  or  Cash-Book. 


which  cash  is  liandled.  It  will  be  seen  that  the  arrangement  of  this 
cash-book  makes  convenient  the  posting  of  the  items  to  the  three  ledgers, 
inasmuch  as  a  glance  down  any  column  shows  what  items  are  to  be  posted 
to  the  ledger  in  hand. 

The  three  small  columns  at  the  left  of  each  page  are  for  posting 
marks.  The  first  of  these  columns,  headed  "Special  Accounts,"  is  for 
use  with  those  items  that  must  be  sub-posted  to  any  other  than  the  regular 
ledger  accounts,  such  as  rents,  items  for  the  Loan  Register,  etc.  In  the 
ledger  a  complete  set  of  books  is  kept  for  each  trust,  just  as  the  owner 


The  Ooardlan  Savinp  and  Tnut  Conpany.  Trust  Department 


V..A 


^J- 


V.J 


YiQ.  7. — RroHT-HAxn  Faoi:  or  GEvrRAi    Irist  .Ioirnai  or  f  vs»i-Uik)k. 


184  TRUST    COMPANIES. 

of  the  trust  miglit  keep  them  for  himself.  Each  item  in  the  general 
cash  book  therefore  appears  in  the  individual  ledger  of  its  proper  trust 
as  both  a  debit  and  a  credit.  The  columns  in  Figure  7  headed  "Individ- 
ual— Dr. — Cr."  are  for  the  marks  of  postings  to  these  accounts.  In  the 
figure  the  entries  are  numbered  for  convenience  in  describing  the  entries: 
these  numbers  would  not  appear,  of  course,  in  the  regular  use  of  the 
cash-book.  Thus,  in  the  left  page  of  Figure  7,  entry  No.  1  would  be 
posted  first  as  a  debit  to  the  cash  account  of  the  Smithville  Bond  Pool, 
and  a  check  mark  made  in  the  Dr.  posting  column.  It  would  then  be 
posted  to  the  credit  of  Syndicate  Subscriptions  account  of  the  Smithville 
Bond  Pool,  and  a  check  mark  made  in  the  Cr.  posting  column.  Of  the 
remaining  entries  on  the  left  page,  the  debits  would  all  be  made  to  the 
cash  accounts  of  the  several  trusts.  The  credits  would  be  made  as  fol- 
lows: Entry  No.  2,  to  the  Income  account  of  the  trust  concerned; 
entry  No.  3,  to  income;  entry  No.  4  to  the  Bonds  account,  and  if  the 
bonds  are  sold  at  a  profit,  the  excess  over  the  cost  would  be  posted  to 
the  credit  of  the  Profit  on  Bonds  account;  entry  No.  5,  to  the  Coupons 
account  and  to  the  Bonds  account.  In  entry  No.  2,  the  items  would  be 
sub-posted  to  the  rent  ledger  under  the  account  for  each  piece  of  prop- 
erty, and  the  check  marks  of  the  postings  placed  in  the  Special  Accounts 
posting  column.  In  entry  No.  3,  the  interest  on  the  mortgage  would  be 
sub-posted  to  the  Loan  Register,  under  the  account  for  this  mortgage. 

In  the  right-hand  page  of  Fig.  7,  the  credits  for  all  the  entries  would 
be  made  to  the  cash  accounts  of  the  several  trusts.  The  debits  would 
be  made  as  follows:  Entry  No.  1,  to  Coupon  account  of  the  trust  in- 
volved; entry  No.  2,  to  the  account  of  Mary  Trowbridge,  if  remittances 
are  regularly  made  to  her;  or,  if  remittances  are  not  regularly  made,  to 
the  Expense  account;  entry  No.  3,  to  S.  S.  Smith,  Syndicate  Manager; 
entry  No.  4,  to  Expense  and  Repairs  accounts,  respectively;  entry  No.  5, 
to  Repairs  and  O.  R.  Gates  accounts,  respectively.  The  Repairs  items  in 
entries  Nos.  4  and  5  would  be  sub-posted  to  the  Rent  ledger  under  the 
accounts  of  the  properties  involved,  a  separate  account  being  kept  of 
the  expenses  and  repairs  on  each  piece  of  property.  It  will  be  noted 
that  a  voucher  is  kept  for  each  item  of  expense,  the  vouchers  for  each 
trust  being  numbered  consecutively. 

With  this  journal,  as  already  stated,  ledgers  are  used  in  which  a  com- 
plete set  of  "double  entry"  books  is  kept  for  each  trust.  The  ledgers, 
which  are  preferably  loose-leaf  books,  are  indexed  by  tabs  on  the  edges 
of  the  leaves,  and  after  the  tab  index  for  each  trust  are  inserted  as  many 
ledger  leaves  as  may  be  required.  The  number  of  accounts  carried  for 
each  trust  depends,  of  course,  upon  the  character  of  the  trust.  It  may 
require  the  carrying  of  only  Cash  and  one  other  account,  such  as  Prin- 
cipal or  Income.  It  may  be  necessary  to  add  to  these  such  accounts  as 
Bonds,  Stocks,  Mortgages,  Real  Estate,  Individuals,  etc.  Under  this 
plan  the  cash  account  will  of  course  contain  a  memorandum  of  every 
cash  transaction  affecting  the  trust,  and  it  therefore  serves  as  the  basis 


FORMS  FOR  TRUST  DEPARTMENT 


185 


for  renciering  statenunts  of  account  citlicr  to  tlif  court  or  to  beneficiaries 
or  to  the  maker  of  the  trust.  Some  compani'-s  call  this  account  the  Bank 
account  rather  than  the  Cash  account.. 

For  these  ledger  pages  any  of  the  forms  shown  hereafter  may  be  used. 
If  only  one  form  be  used,  as  is  practicable,  though  not  entirely  convenient, 
that  shown  in  Figure  l6  is  probably  the  most  useful,  being  adapted  to 
different  kinds  of  accounts,  and  containing  columns  for  both  debit  and 
credit  balances. 

Inasmuch  as  the  eharaet«r  of  tiw  husimss  done  in  trust  work  for  court 
trusts  differs  considerably  from  that  done  for  eorj)oration  trusts  and 
others,  many  companies,  as  already  stated,  di\  id«-  the  trust  work  into  two 
divisions,  and  use  different  styles  of  records  in  the  two  divisions.  Figure 
8  represents  a  journal  form  used  in  the  corporations  division  of  tl)«   trust 


Ai 


■IfVirt/  '^^f  A"*  i^C-^ 


^ooo.  B^.^  <fc 


^*^- 


Fio.   8. — Journal   kor   the    CoRroRATioxs   Divisiox,   Tbust   Depaitmext. 


department.  The  general  arrangement  of  the  page  is  one  which  is 
coming  to  be  used  extensively  for  various  purposes  both  in  trust  and 
banking  departments.  Both  debit  and  credit  items  are  brought  on  to 
the  same  page;  and  the  space  for  names  and  descriptions  being  in  the 
center,  the  writing  of  the  names  of  accounts  is  often  avoided  in  cases 
■where  there  are  both  debits  and  credits  to  be  made  to  the  same  account. 
It  also  causes  the  name  of  each  account  to  stand  out  prominently  on  the 
page.  The  object  of  the  extra  column  headed  "General  Accounts"  is  to 
facilitate  the  separation  of  accounts  which  for  any  reason  are  to  be 
treated  differently  from  the  regular  deposit  accounts,  or  of  accounts 
which  are  carried  in  a  separate  ledger.  For  exam|)le,  the  total  funds  of 
the  department  are  carried  as  Bank  account,  which  is  of  course  a  general 
account  made  up  of  the  cash  balances  of  all  the  accounts  in  the  depart- 
ment.    These  funds  are  carried  by  some  companies  in  their  banking  de- 


186  TRUST    COMPANIES. 

partments^  and  by  some  are  carried  in  other  trust  companies  or  banks. 
As  shown  in  the  figure,  the  total  of  disbursements  for  the  day  is  credited 
to  Bank  in  the  General  Accounts  column;  and  the  receipts  are  debited  to 
Bank  either  at  the  close  of  the  day  or  at  convenient  times  during  the  day 
as  deposits  of  the  funds  are  made.  Among  other  general  accounts  would 
be  the  interest  account  for  interest  received  on  the  Bank  account.  Bonds 
and  Stock  account,  if  the  total  of  these  items  be  carried  in  a  separate 
account,  etc.  The  company  from  whom  the  writer  got  this  form  carries 
all  coupon  accounts  in  a  separate  ledger,  and  therefore  enters  items  for 
coupon  accounts  in  the  General  Accounts  column  in  the  journal.  The 
second  entry  in  Figure  8 — that  of  the  credit  to  "Auburn  and  Birmingham 
Traction  Pool" — illustrates  a  use  of  the  two  columns.  The  bonds  having 
been  purchased  at  80,  are  carried  at  that  figure  in  the  general  Bonds 
account.  The  sale  here  recorded  having  been  at  86,  the  profit  of  $240 
is  journalized  in  the  Deposits  column,  while  the  amount  at  which  the 
four  bonds  are  carried — $3,200 — is  entered  in  the  General  Accounts 
column. 

The  next-to-the-last  entry  in  Figure  8  illustrates  a  time  and  labor 
saving  plan  that  is  much  used.  A  dividend  of  $48,955  is  paid,  the 
amount  being  divided  between  perhaps  one  or  two  hundred  persons. .  Only 
the  total  is  entered  in  the  journal;  while  the  items,  taken  from  the  stubs 
of  the  department's  check-book,  are  entered  in  detail  in  the  ledger.  In 
case  of  a  large  number  of  credit  items  to  the  same  account  on  the  same 
day,  a  similar  plan  is  followed,  the  details  being  posted  directly  to  the 
ledger  from  the  credit  tickets.  This  plan  subtracts  nothing  from  the 
completeness  of  the  record,  while  it  saves  about  half  the  labor  otherwise 
necessary. 

It  will  be  noted  that  although  this  book  is  practically  a  cash  book, 
is  is  not,  like  the  form  shown  in  Figure  7,  arranged  in  cash-book  style. 
This  matter  is  largely  a  question  of  personal  taste,  but  the  usage  is  in 
favor  of  using  the  journal  rather  than  the  cash-book  style,  the  credits  ap- 
pearing on  the  right  and  the  debits  on  the  left,  as  in  Figure  8. 

The  ledger  for  this  department  is  preferably  a  loose-leaf  book.  There 
is  so  much  variety  in  the  nature  of  the  accounts  that  must  be  kept  that 
it  is  a  decided  convenience  to  have  special  rulings  for  the  different  kinds 
of  accounts;  and  this  cannot  be  done  easily  unless  loose  leaves,  to  be  in- 
serted as  needed,  are  used.  The  leaves  must  be  large  enough  to  accom- 
modate accounts  requiring  much  space.  A  convenient  size  is  about  fifteen 
and  one-quarter  inches  deep  and  eleven  inches  wide  for  the  rulings,  with 
such  added  width  as  is  needed  for  the  style  of  binder  used.  Figures  9, 
10,  11,  12  and  l6  show  several  ledger  forms  that  have  been  found  useful. 

Figure  9  shows  a  form  adapted  to  accounts  in  which  funds  are  col- 
lected in  installments  or  on  "calls,"  or  in  which  payments  are  to  be  made 
in  several  dividends,  or  in  which  either  receipts  or  disbursements  are  to 
be  classified.  The  figure  illustrates  the  use  of  the  form  for  an  account  in- 
volving the  collection  of  funds  on  several  calls.     From  this  record  it  is 


FORMS  FOR  TRUST  DEPARTMENT. 


187 


easy  to  ascertain  at  any  nionunt  the  totals  paid  in  on  eacli  call,  the  per- 
sons who  have  made  payments  on  each,  and  the  balance  of  the  account. 
In  a  similar  manner,  where  the  form  is  used  to  record  the  payment  of 
funds  in  several  dividends,  it  easily  shows  any  information  regarding 
the  account  that  is  apt  to  be  wanted.  For  ordinary  dividend  accounts, 
however,  the  use  of  Form  10  is  better,  inasmuch  as  the  whole  dividend 
is  usually  paid  on  the  same  day,  and  the  complete  account  may  therefore 
be  at  once  placed  on  a  i)age  by  itself.  Where  funds  are  to  be  disbursed, 
and  a  separate  account  is  wanted  of  items  paid  on  account  of  principal, 
interest,  conunission,  expense,  etc.,  this  form  is  well  adapted  to  the  needs. 
Recause  of  the  various  uses  to  which  the  form  may  be  put,  the  several 
columns  have  no  printed  headings;  but  it  is  customary  to  have  rubber 
stamps  for  the  headings  most  used. 


p-r-Tf- 


PlC      f),  —  I.KDC.KH     Slir.KT    fOR     AsSrsSMK  NTS     AND     niSTRllUTIOVS 


Figure  10  shows  a  ledger  form  adapted  to  accounts  where  not  much 
room  for  descrii)tion  of  items  is  needed.  The  record  is  kept  in  a  very 
compact  shape.  The  figure  illustrates  its  use  for  dividend  accounts.  If 
the  numWr  of  items  be  large,  the  account  is  continued  on  the  right  half 
of  the  page,  shown  blank  in  the  figure,  and  on  the  other  side  of  the  leaf, 
which  is  ruled  in  the  same  way.  If  the  number  of  items  be  small,  two 
dividends  may  be  recorded  on  each  page.  This  is  a  convenient  form  to 
use  for  coupon  accounts,  unless  a  special  form  like  that  shown  in  Figure 
12  is  used.  The  small  columns  headed  by  check-marks  V  in  this  form 
are  for  use  in  case  the  work  is  to  be  checked  over  in  a  hunt  for  an  error 


188  TRUST    COMPANIES. 

or  for  any  otlier  purpose.  The  use  of  the  column  for  such  check-marks 
leaves  the  page  in  neater  shape  than  do  check-marks  placed  indiscrimin- 
ately, besides  being  a  clearer  guide. 

In  Figure  11  is  shown  a  ledger  page  which  is  convenient  where  the 
items  are  to  be  described  at  length.  The  descriptions  of  debit  and  of 
credit  items  may  be  separated  by  the  device  explained  in  connection  with 
Figure  14. 


aroo 

"kXdiysJU.^-^ 

H^c 

Qv^    (krrrJL 

IOC 

"•AM   (irrw~ 

ioc 

OvH.^^<i^ 

Xcc 

Odi^i^Jc^ 

sec 

a(fb^iyw^^ 

Ucc 

(■^JL^^M^U^fi^ 

loot 

t  s  cu.^ 

:i.co 

z 

IfCO 

<cihfl..&f^.^ 

lu.a^^.:^?*-. 

locc 

X./CL..^ 

J^o 

OOu.-JM  £  ^UifJ^ 

IOC 

Fig.  10. — Ledger  Sheet  for  Gexehal  Use. 


Fig.   11. — Ledger  Sheet  with  Wide   Description   Column. 


In  Figure  12  is  shown  a  form  which  combines  a  ledger  page  for 
coupon  accounts  and  a  record  of  coupons  paid.  The  combining  of  the 
two  is  a  great  time  saver,  and  the  arrangement  for  noting  the  bond  num- 
bers of  coupons  paid  is  very  convenient.  In  the  first  debit  to  the  account 
— that  for  the  payment  of  coupons  presented  by  John  Doe — record  of 
the  bond  numbers  137,  138  and  139  is  made  in  the  description  column  in 
the  ledger  part  of  the  page,  and  check-marks  (V)  are  made  in  the  proper 
spaces  in  the  form  for  bond  numbers  of  ceupons  paid.  In  the  fourth 
debit,   the    First    National    Bank    of   Chicago   has    presented   twenty-five 


FORMS  FOR  TRUST  DEPARTMENT. 


189 


TWtTM 


Avi*rt^''.i...r»I^V<,4»»f. 


/       n-Mo-'     „ 


'S;''^    W*  7J.--.40 


f9f 


In 


J.:.TO.l.. 


riiu 


W  .«tt, 


=^ 


i ,   in.  7n , , 


;ffF^;;;::i:t:tT;: 


FlO.    1-J. COMBIKED    CofPON-    LkDC.ER    AND    UkCORD    ShEKT. 


•coupons  cut  from  bouds  wliose  numbers  are  not  consecutive.  To  list  all 
these  numbers  separately  would  require  considerable  time,  and  then  the 
record  would  not  be  as  clear  as  that  obtained  by  the  device  here  used. 
The  letter  "a"  is  used  to  designate  the  coupons  covered  by  this  entry. 
This  letter  is  then  placed  in  each  of  the  little  squares  showing  the  bond 
numbers  of  such  coupons— i.  e.,  4i,  45,  1'2S,  1'24,  1^25,  1-26,  232,  412,  4KS. 
414,  etc.  The  next  party  presenting  a  bunch  of  coupons  whose  bond 
iiumbers  are  not  consecutive  is  given  the  letter  "b,"  the  next  "c,"  and  so 
on.    As  is  evident  from  a  study  of  the  rtg^ire.  this  device  shows  easily  and 


190  TRUST  COMPANIES. 

quickly  what  coupons  have  been  paid,  and  who  has  presented  any  par- 
ticular coupon.  In  case  the  ledger  space  on  the  page  is  exhausted  before 
the  form  for  bond  numbers  of  coupons  paid  is  filled,  the  use  of  the  latter 
is  continued,  only  the  ledger  space  of  the  next  page  being  used.  It  is 
more  apt  to  happen,  however,  that  several  pages  will  have  to  be  used  for 
the  bond  numbers  of  coupons  paid  before  the  ledger  space  of  one  page  is 
filled.  If  more  than  QQQ  bonds  are  outstanding  from  which  coupons  are 
to  be  presented,  of  course  two  or  more  pages  will  have  to  be  used  for  re- 
cording the  bond  numbers  of  the  paid  coupons. 

The  use  of  these  various  ledger  forms  suggests  again  the  very  great 
convenience  of  the  loose-leaf  system.  Under  this  system,  whenever  an  ac- 
count calls  for  the  use  of  any  one  of  these  forms  or  of  any  other  form 
which  may  be  suggested  by  the  needs  of  the  case,  such  form  may  easily 
be  inserted  in  the  ledger  and  the  records  be  kept  in  the  clearest  and  most 
convenient  manner.  The  system  is  adaptable  to  any  need  that  may  arise. 
This  is  not  true  of  the  bound  book;  for  while  a  number  of  different  forms 
may  be  bound  under  the  same  cover,  it  is  impossible  to  foresee  just  how 
many  pages  of  each  kind  of  form  will  be  needed;  and  it  is  impossible  to 
group  them  in  the  most  convenient  manner  for  a  series  of  accounts. 
Moreover,  at  any  time  a  new  kind  of  account  may  be  received  which,  for 
the  greatest  clearness  and  convenience,  will  require  a  kind  of  record  dif- 
ferent from  any  in  the  book.  In  such  a  case,  if  the  loose-leaf  system  is 
used,  all  that  is  necessary  is  to  have  the  printer  prepare  the  new  form, 
and  insert  it  in  the  binder.  Furthermore,  under  the  loose-leaf  system 
there  need  be  carried  in  the  ledger  only  such  pages  as  are  needed,  while 
in  a  bound  book  there  are  certain  to  be  many  unused  pages,  and  the  num- 
ber of  such  unused  pages  is  sure  to  be  increased  as  the  number  of  differ- 
ent forms  is  increased.  When  all  of  the  pages  of  a  certain  form  are  used, 
the  book  must  be  filed  away  with  many  pages  of  the  other  forms  unused. 
This  takes  space  in  the  vault  and  adds  to  the  expense. 

Journals  and  Ledgers  for  the   Estates  Department. 

In  the  Estates  Department,  especially  if  the  amount  of  business  is 
large,  it  is  convenient,  if  not  essential,  to  have  record  forms  prepared 
especially  for  the  kind  of  work  handled.  There  is  much  variety  in  the 
forms  used  by  different  companies;  and  it  is  of  course  true  that  a  com- 
pany doing  only  a  small  business  in  this  line  will  find  convenient  the  use 
of  forms  somewhat  different  from  those  required  by  larger  companies. 
The  chief  points  of  excellence  to  be  desired  in  a  system  for  keeping  ac- 
counts of  this  character  are:  simplicity  and  clearness;  adaptability  to 
both  large  and  small  accounts;  adaptability  to  accounts  requiring  many 
sub-accounts  and  to  those  requiring  but  few  sub-accounts;  convenient  ar- 
rangement for  rendering  statements  to  courts  or  to  others  directly  from 
the  books,  without  the  necessity  of  the  stenographer  being  furnished  with 
a  separate  copy  of  the  account. 


FORMS  FOR  TRUST  DEPARTMENT. 


191 


With  all  these  points  and  some  others  in  view,  the  best  system  of 
books  for  the  Estates  Department  that  the  writer  has  seen  is  that  de- 
scribed in  connection  with  Figures  13,  14,  16  and  18,  whicli  Mas  adopted 
by  the  company  using  it  after  experimenting  with  other  forms.  This 
system  involves  the  use  of  a  general  journal,  in  which  is  given  in  skeleton 
form  the  total  transactions  for  the  day  in  all  trusts;  individual  journal 
sheets  in  which  the  transactions  for  each  trust  are  entered  in  detail  in 
chronological  order;  ledger  sheets,  and  memorandum  sheets.  The  loose- 
leaf  system  is  used  except  for  the  general  journal. 

Figure  13  shows  the  general  journal  used  in  this  system.  The  size  of 
each  page  is  151/4  inches  M-ide  by  14%  inches  deep.  This  book  serves  the 
double  purpose  of  furnishing  a  resume  of  the  total  transactions  for  the 
day  in  all  the  trusts  that  are  active  for  the  day,  and  of  distributing  tlie 
items  to  their  proper  jjlaces  among  the  general  accounts  with  a  minimum 
of  labor  and  yet  with  accuracy  and  clearness.  Reading  from  the  center 
of  the  book  outward  on  either  page,  the  headings  are:  Date,  Memoranda, 
Cash,    Bank,    Income,    Principal,    Individual,    Unimproved    Real    Estate, 


■.<       UK  »JI 


Fig.   13. — Lejt-Hand   Page,   General  Journal,   Estates   Department. 


Improved  Real  Estate,  Real  Estate  Mortgages,  Land  Contracts,  Notea, 
Bonds,  Stocks,  Total;  the  headings,  with  the  exception  of  the  first  t^o, 
corresponding  to  the  names  of  the  general  accounts  carried.  This  com- 
pany finds  it  convenient  to  maintain  a  separate  cash-drawer  in  this  de- 
partment, and  hence  the  columns  for  both  Bank  and  Cash.  Where  such 
a  cash-drawer  is  not  maintained,  the  Cash  column  would  of  course  be  un- 
necessary. In  one  of  the  columns  headed  Memoranda  are  entered  simply 
the  names  of  the  trusts  having  transactions  during  the  day,  and  opposite 
such  names,  in  the  proper  columns,  the  debits  or  credits  to  the  various  ac- 
counts under  each  trust.  In  the  figure,  since  it  is  necessary  to  show  the 
form  here  in  two  parts,  the  names  are  entered  in  both  of  the  Memoranda 
columns;  but  in  practice  they  need  be  entered  but  once. 

In  Figure  13,  the  first  entry  sliows  that  there  was  received  for  the 
M.  N.  Andrews  tru.st,  .f4,8'29.30,  which  is  debited  to  Cash  (left-hand 
page).  On  the  right-hand  page,  .^l.-'JOO  of  this  amount  is  shown  credited 
to  Principal,  and  the  balance,  $3e9.30,  to  Income.  In  the  second  entry  it 
is  shown  that  there  has  been  received  for  the  Estate  of  M.  J.  Champion, 


192 


TRUST  COMPANIES. 


$7,500,  which  is  debited  to  Cash  (left-hand  page),  and  credited  to  Im- 
proved Real  Estate  (right-hand  page).  Also,  for  this  estate  there  has 
been  expended  $250,  which  is  credited  to  Bank  (right-hand  page)  and 
debited  to  Income  (left-hand  page).  In  the  eighth  entry  it  is  shown 
that  there  has  been  disbursed  for  the  Estate  of  D.  G.  Wainright  the  sum 
of  $11,515.75,  of  which  $3,000  is  debited  to  Bonds,  $2,000  to  Real  Es- 
tate Mortgages,  $6,350  to  Improved  Real  Estate,  and  $165.75  to  Income. 
The  last  entry  shows  that  of  the  funds  received  during  the  day,  $16,000 
was  deposited  in  the  bank.  The  totals  in  the  total  column  on  either  page 
represent  the  totals  of  all  items  on  the  page  except  the  Cash  and  Bank 
items.  The  total  shown  on  the  right-hand  page  agrees  with  the  footing 
of  the  Cash  column  on  the  left-hand  page;  and  that  on  the  left-hand 
page  with  the  footing  of  the  Bank  column  on  the  right-hand  page.  The 
footings  of  the  various  columns  are  carried  forward  from  page  to  page 
for  a  week  or  for  any  convenient  period,  and  are  then  posted  to  the  gen- 
eral accounts. 


CE-EDIT 


Uf  ou  4  OS... 


■■'Vu.d,3,^.A,.-^^ 


Fig.  13. — Right-Haxd  Page,  General  Jourital,  Estates  Department. 


The  day's  work  being  thus  summarized  in  the  general  journal,  the 
work  for  each  trust  is  entered  in  detail  in  the  individual  journal  of  the 
trust,  the  form  for  which  is  shown  in  Figure  1  i.  The  credit  entries  are 
made  directly  from  credit  tickets,  and  the  debit  entries  from  the  stubs  of 
the  department  check-book.  This  journal,  it  will  be  noted,  separates  en- 
tries for  Income  account  from  those  for  Principal  account,  which  is  a 
convenience  not  only  in  posting,  but  in  the  rendering  of  separate  state- 
ments of  the  two  accounts.  At  the  left  of  the  space  headed  Memoranda 
will  be  noticed  the  headings  Dr.  and  Cr.  This  is  a  device  for  separatii\g 
the  descriptions  of  debit  and  credit  items,  the  former  being  begun  next 
to  the  date  line,  and  the  latter  under  the  abbreviation,  Cr.  This  enables 
the  eye  to  quickly  pick  out  the  descriptions  of  the  two  classes  of  items. 

In  Figure  15  is  sliown  another  journal  form  somewhat  similar  to 
this,  but  arranged  in  cash-book  style,  with  receipts  entered  in  the  left- 
hand  column.  At  the  top  of  the  first  page  in  this  journal  are  given 
brief  memoranda  regarding  the  trust.  Concerning  this  see  the  discussion 
in  connection  with  Figure  IS. 


FORMS  FOR  TRUST  DEPARTMENT. 


193 


ribOiL 


'%rr 


■u-3'yu — t^  ..   'Xft  (ai«LCu.,'   . 


e<aZ*.,JL^5..^a, 


wnr 


Fig.   14. — Ikdividual  Trust  Jouhvai.,   Estates  Departmkxt. 

From  the  Individual  Journal  of  each  trust  the  items  are  of  course  to 
be  posted  to  the  ledger  accounts  for  that  trust.  Tlu-se  ledjfcr  accounts 
may  include  any  or  all  of  those  shown  in  the  headings  of  Figure  IS,  or 
others  not  there  shown.  A  loose-leaf  binder  is  used,  and  the  account  of 
each  trust  is  indexed  by  tabs  on  the  edges  of  the  leaves.  After  the  tab 
index  for  each  trust  is  placed,  first  the  memorandum  slieet  .shown  in  Fig- 
ure 18;  next  the  journal  sheet  (Figure  14),  and  then  ledger  pages  for  as 
many  accounts  as  the  trust  may  require.  The  form  for  the  ledger  pages 
is  shown  in  Figure  l6,  which  illustrates  the  use  of  the  form  for  the  In- 
come account.  The  space  for  description  of  items  is  limited,  full  descrip- 
tion having  been  given  in  the  journal,  and  still  more  detailed  description 
of  debit  items  In  the  vouchers.  Space  is  provided  for  l)oth  debit  and 
credit  balances,  as  the  form  is  used  for  accounts,  like  securities  accounts, 
which  have  debit  balances,  as  well  as  for  those  which  have  credit  bal- 
ances, like  Principal  and  (usually)   Income. 

•-»  ^;.;^;^'    -  The  Security  Trust*  Safe  Deposit  Co,  Camden.  N.J.  ,  ,  .  _  /ry 


"}? 


'-71 


•^V'^-rf.^ 


Fig.    15. — Ixdividiai    Trist  Joihxai..   F.STATrs  Depahtmknt. 


194* 


TRUST   COMPANIES. 


TRUST  DEPARTMENT— ESTATES 


C7/-HyQ.gr-i-vv-g^    (lai^,^-t— 


io; 


Qr^i.  <P<^ 


A«.V* 


I 

Fig.    16. — Ledger    Page,    Estates    Department. 


In  Figure  17  is  shown  another  form  for  a  ledger  page  for  this  workj 
having  much  more  room  for  description  of  items. 


A- 


X^ 


Xa.Aj^ 


Fig.    17. — Ledger    Page,    Estates    Department. 


Figure  IS  represents  a  memorandum  page  which  is  inserted  at  the 
beginning  of  the  account  of  each  trust.  Its  object  is  to  place  within 
convenient  reach  of  the  bookkeeper  such  facts  as  he  needs  for  guidance 
in  attending  to  various  matters  in  connection  with  the  trust.  It  is  not 
intended  to  take  the  place  of  the  Trust  Register,  where  fuller  details  are 
given;  nor  does  it  take  the  place  of  the  department  tickler,  in  which  are 
made  memoranda  of  all  things  that  will  need  attention  in  the  future. 
The  entries  to  be  made  on  this  sheet  will  vary  with  the  circumstances  of 
the  trust  and  with  the  personal  preferences  of  the  head  of  the  depart- 
ment and  of  the  bookkeeper,  for  whose  convenience  it  is  chiefly  designed. 
In  Figure  15  have  been  shown  the  memoranda  used  by  another  company 
for  a  particular  kind  of  trust. 

As  already  noted,  some  companies  prefer  to  keep  their  Trust  Register 
leaves  bound  in  the  Trust  Ledger,  such  leaves  being  inserted  at  the  be- 
ginning of  the  account  of  each  trust,  so  that  all  records  pertaining  to  a 
given  trust  are  kept  together.  The  forms  shown  in  Figures  2  and  4* 
are  adapted  to  such  use.'^ 


71  See   pp.    177   and    17 


nUSf  DePAnHtNT-tSTAIti 


FORMS  FOR  TRUST  DEPARTMENT.        195 


IIT  DEX 


tmf  —CM  (ineuw  Ia«  a 


:U»juJ<rr'*^3rxoiiU  0^3^  Utstf  <]^  v^Vu^  C^  v-iW'.v^ 


-jH-.-^tvi^ti: 


<k.  U,   'A.w<    O-v-^^J^^-j.,   o. '^  Ate  3/. 


If  !*'.».=  ;!•.  •!_/  L    ..Vwt.^Jrf. 


■K^ 


vV/.  r.. 

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a-*    ^ 

r^«^  ^r^ 

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--,it. 

<U 

Fio.  19. — Memorandcm  Suket  fob  Estates  Department  Ledgeh. 

Some  companies  insert  at  the  bejrjnning  of  the  account  of  each  trust 
an  inventory  sheet,  showing  the  total  principal  at  the  time  the  trust  was 
received,  and  the  changes  made  in  same.  Figure  19  shows  such  a  sheet 
used  by  the  same  company  (in  New  York)  that  uses  the  form  shown  in 
Figure  17. 


r     /...r^     ^t;,Ti 


J^a^ 


irir/ii-ti 


.-..J  ./?.  /^^. 


?  / 


-•>   /t5«-,_i   •^/1_// 7V,«^yl-.   U.'    J  JCiC    M/it^^^.^tmtA. 


Fig.  19. — Inventory  Sheet,   Page  1. 


The  inventory  shows  a  balance  of  .$tS5,150  in  Bonds  and  Mortgages, 
$7,200  in  Real  Estate,  and  $H.350  in  Securities.  The  total  inventory 
being  $89,-l()8.69.  the  Principal  account  should  show  a  balance  of 
$2,168.69  Cash   Principal.      Such   an   inventory   ought,  of  course,   to   be 


196 


TRUST  COMPANIES. 


made  somewhere  in  the  records.  It  may  be  in  such  an  inventory  sheet 
as  here  shown;  or  in  the  trust  register;  or  in  the  regular  ledger  account 
of  the  trust,  as  shown  in  Figure  22. 

The  opinion  has  already  been  expressed  that  the  general  plan  just 
outlined  for  the  handling  of  estates  department  accounts  is  the  best  one. 
There  are  those,  however,   who  prefer   other   styles   of  records;   and  in 


■Ji^:. 


r  y...r/    ^'.r.T, 


^5y 


i.j  r  .}-c._  7-^t^ 


Lnti- 


^-..,. 


Fig.  19. — Inventory  Sheet,  Page  3. 

Figures  20  and  21  are  shown  other  styles  of  ledger  sheets,  and  in  Figure 
22,  the  combined  journal  and  ledger  form  given  in  the  Book  of  Forms 
issued  by  the  Trust  Company  Section  of  the  American  Bankers'  Associa- 
tion. In  the  ledger  form  shown  in  Figure  20,  provision  is  made  for 
separate  accounts  of  Capital  (or  Principal)  and  Income,  and  balance 
columns  for  each  are  provided.  The  first  page  under  the  account  of 
each  trust  in  this  ledger  is  a  memorandum  page,  the  information  called 
for  being  shown  hj  the  following  headings:     Brief  of  Terms  of  Trust, 


Union  Trust  and  Storage  Company, 


CAPITAL 

Ou. 

0.. 

c. 

B.U-. 

D«, 

v.. 

o 

BU.„, 

1 

i 

1 

Fig.  20. — Trust  Ledger,  Estates  Department. 


Date  of  Receipt  of  Trust,  Amount  of  Commission,  Character  of  Funds 
Received,  Income,  When  to  be  Paid,  Income  Payable  to,  and  History. 
The  ledger  form  shown  in  Figure  21  provides  for  separate  accounts  of 
Principal,  Income  and  Trust  Investments.  It  does  not  have  balance 
colunms — a  serious  defect.  The  obvious  objection  to  these  two  forms, 
Figures  20  and  21,  is  that  no  provision  is  made  for  the  keeping  of  more 


FORMS  FOR  TRUST  DEPARTMENT 


197 


than  two  or  three  accounts  uiukr  each  trust;  whereas  it  is  usually  con- 
venient, and  sonietiints  imperative,  that  a  number  of  other  accounts,  such 
as  those  shown  in  the  headings  of  Figure  13,  be  kept. 

Of  quite  a  diflercnt  character  than  any  of  the  ledger  forms  thus  far 
given  is  that  shown  in  Figure  i>'J,  which  is  both  a  journal  and  a  ledger. 
It  is  necessary  to  show  tiie  form  here  in  two  parts,  the  two  parts  together 


»JCAN    TKIl-^T   < 


m 


ilJlBi 


■zr:-T 


m- 


Fig.  21. — Trust  lj:rK;ER,  Estates  Di: 


I'AHTJIEXT. 


representing  the  open  book  as  it  lies  before  the  b(K)kkeeper.  This  form 
has  some  distinct  advantages  and  some  distinct  disadvantages.  The  ad- 
vantages are  most  api)arent  to  the  bookkeeper  who  handles  the  l>ook 
daily  and  is  thoroughly  familiar  with  its  every  detail;  the  disadvantages, 
to  the  officer  or  other  employee  who  is  not  familiar  with  the  book  from 
daily  usage,  and  wishes  to  get  some  information  in  a  hurry  when  the 
bookkeeper   is    out    for    lunch.      Combining    as    it    does    the    journal    and 


Fig. 


-t^  .t- i.»  'i~rJtfii:*J .  cJ,-.^--^  ^ 
.  Ill*  »dcuv.     .  .       . 

tc^l^^K^ 0  .*-<     •  .        . 

lUJ*  C^rr-f  -v^*.    -v^Cr 

a  -3  f>r^      "       -  -      ■• 

(jjtt—iiJwi.-^.  >(  X  ■^<*~~       - 

fi  5  <at — t     .     - 
ii.  'v\  />irt»fci-.  A.-*-^ *^r~^ 


. — Left-hand  Pack.  Comhinkd  .Toirnai.  and  I,ed(;er  F.stat>:s  Department. 


ledger,  all  posting  is  done  away  with,  except  for  such  sub-accounts  as  it 
may  seem  wise  to  carry.  The  record  of  transactions  in  all  the  difl"erent 
accounts  is  kept  in  chronological  order,  and  in  rendering  reports  the 
stenographer  has  but  to  cojjy  the  record  as  it  stands.  -The  entries 
for  anv  account  may  be  easily  found.  On  the  other  hand,  the  absence 
of  balance  columns,  except   for  Cash,  is  a  serious  objection.     The  bal- 


198 


TRUST   COMPANIES. 


iinces  may  be  found  by  simple  subtraction  if  the  footings  are  always 
up  to  date;  but  they  are  apt  not  to  be  so.  Another  objection  to  the 
form  is  the  fact  that  other  accounts  than  those  given  may  be  called 
for,  and  there  is  no  way  of  keeping  them  except  as  sub-accounts. 

Most  of  the  entries  shown  in  the  figure  are  self-explanatory.  For 
each  item  there  is  both  a  debit  and  a  credit  entry,  and  the  accounts 
as  a  whole  must  always  be  in  balance  if  the  work  is  properly  done. 
The  check  columns  for  Individuals,  for  Interest,  Rents  and  other  forms 
of  Income,  and  those  after  the  columns  headed  "Personal  Property," 
may  be  used  either  for  postings  to  sub-accounts  or  as  a  means  of  pick- 
ing out  the  entries  for  the  particular  classes  of  items,  or  for  both  pur- 
poses.     The    Principal    account    shows   the   total    Principal    at    any   time, 


Fig. 


-Rigiit-Haxd    Page,    Combixed    Trust    Joitrxai 
Department. 


LND    Ledger,    Estates 


including  both  Cash  and  Investments.  The  cash  Principal  may  be 
found  by  subtracting  from  the  balance  of  the  Principal  account  the  total 
of  balances  under  the  four  accounts  preceding;  or  by  subtracting  from 
the  balance  of  Cash  account  the  balance  of  Income  account;  and  it  may 
be  proved  by  combining  the  two  operations.  Some  companies  prefer  to 
carry  only  Cash  Principal  in  the  Principal  account. 

The  figure  illustrates  the  plan  of  entering  the  complete  inventory 
of  an  estate,  at  the  time  the  property  is  received,  in  the  ledger.  This 
plan  is  an  excellent  safeguard  against  overlooking  any  item  of  the 
estate,  as  everj'  item  credited  to  Principal  in  the  ledger  must  be  ac- 
counted for.  Items  of  uncertain  value  may  be  entered  here  at  the 
nominal  appraisal  of  one  dollar,  as  shown  in  the  figure.  Whether  this 
plan  of  entering  the  whole  inventory  in  the  ledger  is   better  than  that 


FORMS   FOR   TRUST   DEPARTMENT. 


199 


DAILY  TICKLER. 

TRUST  DEPARTMENT,  Lj  L^-Uj>l  Xc^    ^(CMvr  >^     l9oC ^ 


m^ 


^Ui    '.^c.    ___ 


'\r,..Xl     -If^A,^!/ 


±s. 


OkA. 


S< 


f^..t^'i.d^(^ 


^'.^•Ji    AtTajhr ->•->* -v-:t~ 


'^^  H  if 


'^'    'tf"'"''''  ^■•^•-^^-/-^ 


,^:.M. 


Fig.  i?3.— Tickler. 

of  confining  ledger  entries  strictly  to  cash  transactions  and  keeping 
the  inventory  elsewhere,  is  a  matter  upon  which  opinions  differ;  and 
there  is  good  authority  for  either  course.  Tliere  is  also  a  difference  of 
opinion  as  to  whether  securities  of  various  kinds  that  are  included  in 
the  inventory  of  an  estate  ought  to  be  carried  at  an  appraisal  based 
on  their  market  value  or  at  their  par  value.  Tliere  are  arguments  for 
and  against  either  course.,  and  the  question  is  not  always  an  easy  one  to 
decide. 


SuxDRV  Forms  for  the   Corpor.vtions  Division*,  Tri-st   Dkpart.mext. 

In  addition  to  the  forms  foi  the  record  of  transactions  involving 
cash,  the  trust  department  has  need  of  numerous  other  forms  and  rec- 
ords. Of  great  importance  is  the  Tickler  of  this  department,  upon 
which  a  memorandum  is  made  of  tvery  matter  that  will  require  atten- 
tion at  any  future  time.  It  is  not  safe  to  leave  wholly  to  the  memory 
of  any  individual  or   individuals  the  responsibility  of  attending   to  any 


i^O'l 


^ 


^ 


^.^^  y  f^'j  ^  fe 


i± 


lAAA^iA^- 


liG.  54. — Tickler  Card  ior  Gencbal  Lse. 


200 


TRUST  COMPANIES. 


of  the  details  of  business  so  important.  Aside  from  the  fact  that  mem- 
ory is  not  always  reliable,  especially  when  the  number  of  details  is 
large,  is  the  fact  that  the  man  upon  whose  memory  depends  attention 
to  any  matter  may  be  away  or  sick  or  dead  when  the  time  comes  for 
such  attention.  The  only  safe  plan  is  to  have  a  tickler  entry  made  of 
every  matter  that  must  be  attended  to,  including  those  which  recur  at 
regular  intervals.  The  form  of  the  Tickler  is  not  of  prime  importance, 
so  long  as  it  serves  the  purpose  of  a  reminder  of  the  business  to  be 
done  at  the  time  it  is  to  be  done;  but  the  Tickler  entries  ought  to  be 
plain  enough  to  be  understood  by  others  than  the  one  who  makes  the 
entries. 

The  responsibility  of  seeing  that  the  business  called  for  each  day 
by  the  Tickler  is  attended  to  should  rest  upon  one  man,  who  will  of 
course  distribute  memoranda  to  other  workers  as  the  circumstances  re- 
quire. 


Tru«t 
Number. 

Name  of  Tru««-. 

Also  Payable  At 

\7-^ 

ht.^'iJJl^^  (0^ 

"^M. 

(/..              ^ 

O 

Fig.  25. — Tickler  Card. 


For  those  who  prefer  a  Tickler  in  book  form,  that  given  in  the  Book 
of  Forms  issued  by  the  Trust  Company  Section  of  the  American  Bank- 
ers' Association  is  good.  It  is  shown  in  Figure  23.  The  book  may  be 
either  boimd  or  made  on  the  loose-leaf  plan.  If  bound  it  is  made  to 
last  one  year,  one  leaf  for  a  day,  and  is  indexed  for  months  and  days. 
If  made  on  the  loose-leaf  plan,  it  may  be  indexed  for  years  as  well 
as  for  months  and  days,  space  for  new  leaves  when  needed  being  found 
by  removing  dead  matter. 

The  use  of  cards  instead  of  books  for  Ticklers  is  rapidly  growing. 
The  cards  are  placed  in  a  case  which  fits  into  a  cabinet  in  the  vault, 
and  is  brought  out  each  morning.  It  is  provided  with  index  cards  for 
years,  months  and  daj's.  The  case  may  be  provided  with  a  locking 
device  to  prevent  the  cards  from  slipping  out  accidentally  or  in  the 
event  of  the  case  being  overturned. 


FORMS  FOR  TRUST  DKFARTMENT. 


•201 


The  card  form  of  Tickler  has  many  injportant  advantages  over  tlie 
book  form,  among  which  are  these: 

For  matters  requiring  attention  at  regular  intervals  (monthly,  quar- 
terly, semi-annually,  etc.),  but  one  card  need  be  used  for  each  item. 
When  the  business  is  adjusted  for  one  period,  the  card  is  moved  for- 
ward to  the  next  period.  Where  a  book  is  used,  separate  entries  of  the 
memorandum  must  be  made  for  all  of  the  periods,  which  in  the  case 
of  a  monthly  item  would  mean  twelve  entrirs  each  year  for  perhaps  a 
number  of  years.  If  it  be  urged  against  the  card  plan  tliat  the  clerk 
entrusted  with  the  duty  may  neglect  to  forward  the  card,  or  may  mis- 
place it,  it  may  be  urged  that  he  may  also  neglect  to  write  the  memo- 
randum in  each  of  a  numlK'r  of  necessary  plaers  in  a  book  Tickler,  or 
inay  write  it  in  tlie  wrong  place. 


H<Vv^^J^<L  OlA  .  "^  A4^>v^ 


Oct.      10  \oS 


i:::::^"-  ^o:^ 



_'•• 

•  '^^'f 

«-►», 

...OU.T 

MIfMIUII 

„- 

•"-■»  — 

eOMTIKT* 

2iq-l  1^ 

<if%SS/yJu>c. 

Q^oo 

^OO 

(^n 

:■., 

'' 

— 

— 

— 

Fio.  2fi.— Tic.;i^R  Card. 


Where  preliminary  attention  is  to  be  irivrn  a  matter  some  days  or 
weeks  before  final  attention  is  called  for,  the  card  is  placed  under  the 
first  date,  and  when  attended  to  is  moved  to  the  second  date.  Thus, 
an  item  due  on  the  '.2()th  of  the  month  may  rt<iuir«-  notification  on  tlu- 
()th. 

Where  an  item  of  business  calKd  for  by  tlie  Tickler  of  today  is  for 
any  reason  not  comi)]«  ted.  it  is  only  necessary  to  move  the  card  forward 
to  the  next  day  in  the  Tiekb  r,  instead  of  writing  a  new  entry  in  a 
book. 

In  trust  work,  items  oftrn  netd  to  be  "tickled"  years  in  advance. 
This  is  done  easily  with  a  card  Tickler,  less  easily  with  a  loose-I<af 
hook;  and  is  practically  impossibh-  with  a  bound  book,  Mithout  a  separate 
book  for  each  year,  requiring  a  number  of  volumes  on  hand. 

With  the  card  system  each  item  or  group  of  items  may  have  a  s<  pa- 
rate  card,  M-hich  is  a  great  advantage  over  the  book  system,  where  srv- 


202  TRUST   COMPANIES. 

o.,s  'of.<r|o^  Mixam fest & SmmtgsiSmik. 

CHICAGO 
• ^  1^^ ..O^ 


/no  5«««  «ccelv»e&  f,,0M  . >hr1^>^  .>  . ;^^rv^ 


■ePRESEltTINa 


JLc^^,J-^  V  ti^ 


e4eiu^^..i^(Q 


-TKANSrSR 


j^n_  .JllinoisStdiSamnosiSank., 

eCjLxAt?      'Wa-vsrtv/  NEW  cemincATE  viill  bs  oELrveaso  /7\    /  I 

-^ =^^ ■^^^^^'^ ONLY  UPOU  SUFRKHDER  OF  THIS  RECE/Pr.  (iM7~> 


Fig.  27. — Receipt  for  Stock  Left  for  Transfer. 

cral  dozen  items  occur  on  one  page.  There  is  much  less  liability  of 
overlooking  any  item  where  each  has  a  separate  card  than  where  there 
are  a  number  of  items  on  a  page,  some  of  which  may  be  "dead"  items. 

The  card  Tickler  is  expansive.  If  a  day's  work  involves  need  for 
two  or  three  hundred  items,  the  card-case  will  hold  the  cards.  If  a 
day  occurs  on  which  but  one  item  is  to  be  ticklerized,  but  one  card  need 
be  inserted. 

The  most  obvious  objection  to  the  card  Tickler  is  the  possibility 
that  a  card  may  be  lost.  The  possibility  of  such  a  thing  can  hardly  bo 
denied;  but  its  danger  is  often  overestimated.  The  best  testimony  to 
the  safety  of  the  system  is  the  fact  that  many  companies  which  have 
used  the  card  system  for  years  have  found  it  safe,  and  are  wedded  to 
the  system. 

In  Figure  21  is  shown  a  Tickler  card  for  general  use.  It  has  no 
printing — simply  lines  for  writing,  as  the  character  of  the  memoranda 
to  be  made  varies  so  greatly  that  printed  headings  are  not  useful. 
There  are  certain  classes  of  items,  however,  that  recur  so  frequently 
that  special  forms  may  be  desirable.  Figures  25  and  26  illustrate  two 
such  forms,  that  shown  in  Figure  25  being  for  Coupons  Due,  and  tliat 
shown  in  Figure  26  for  Insurance  Expirations. 

tLbe  IlWcstern  IRcservc  Uruat  Co. 

Wo.  t  £uclii>  Bvenue. 

^rust  department. 

Oi:.BVBt,AND,  O 1 /'^~~ l»O^S^ 


i STOCK  o^  ^Kp     W  j2Xrxc  .  Jru  ALny^ 


POR 'QO  r:i-8aARBS 


STOCK  RBTORNSD, 

XTbe  F"  'Stern  IReP'-vc  Urust  Co. 


eu. 


Fig.  28. — Receipt  for  Stock  Left  for  Transfer. 


FOR>[S   FOR   TRUST   DEPARTMENT.  203 

Forms  for  the  Transfer  of  Stock. 

When  a  stock  certificate  is  brought  to  a  transfer  agent  for  transfer, 
a  receipt  for  same  is  given  to  the  person  who  brings  it.  Figures  27, 
28  and  29  sliow  different  forms  for  this  receipt.  The  receipt  shown 
in  Figure  2?  is  provided  with  a  stub.  In  the  use  of  the  two  others,  a 
copy  is  made  by  means  of  a  carbon  sheet,  the  copy  being  taken  on 
paper  of  a  different  color  from  the  original.  These  receipts  are  for 
temporary  use  only,  and  are  to  be  surrendered  when  the  new  certificate 
is  delivered.     The  new  owner  of  the  stock  is  then  to  sign  the  receipt  on 

No  "720         DEPOSITED  FOR  TRANSFER  with 

Zbc  Clevclanb  Zxmt  Co. 


.Shs.  Common  __Zjyi->L_Sh$.  Pre«efT«d 

Stock  of^A.^  tJuuAnL!c^^*7L0fA^  (.2^. 
Zbc  Clevelan^  ^ru9t  Co.. 

^J>  3,^^= 

NOTICE; — Delivery  will  be  made  to  bearer  only  upon 
return  of  this  receipt  with  the  attached  stub  oroperfy 
signed  by  the  depositor 


720 


.190. 


Received  of  Cbc  ClCPClanO  Cruat  Co Share* 


Nr> 

A3  HEPHtStNTEO  BY  CEBTIf  iC«Tt 
=;h.;                           No                        Sh» 

Nn 

«;hc                 No               Shv 

Address 

Fig.  :?9. — Ki:ci:ii»t  kor  St«xk  I, fit  vor  TRANsrr.R. 

the  stub  of  the  certificate  book.  It  very  often  happens,  however,  that 
the  owner  does  not  himself  come  for  the  certificate,  but  sends  a  mes- 
senger. In  such  case,  the  messenger's  receipt  is  taken,  and  with  the 
certificate  is  sent  a  receipt  to  Iv^  signed  by  the  owner.  Forms  for  this 
receipt  are  shown  in  Figures  .SO  and  31.  It  is  preferably  of  small  size, 
not  over  four  by  two  or  three  inches,  as  it  must  be  pasted  on  the  stub 
of  the  certificate  book.  This  transaction  is  evidently  open  to  the  ob- 
jection  that   the   messenger   sent   for  the  sttx-k   may  be   irresponsible  or 


204  TRUST   COMPANIES. 

not  well  known  to  the  company  which  acts  as  transfer  agent,  and  the 
company  may  hesitate  or  refuse  to  entrust  to  him  the  certificates  rep- 
resenting great  value.  The  form  of  receipt  shown  in  Figure  29  is  de- 
signed to  meet  this  difficulty.  To  the  receipt  from  the  transfer  agent 
is  attached  a  stub  containing  a  receipt  which  is  to  be  signed  by  the  owner 
of  the  stock  or  by  some  person  known  to  the  transfer  agent  as  being 
responsible;  and  without  such  signature  the  new  certificate  will  not  be 
delivered.  This  plan  protects  the  transfer  agent  and  works  no  incon- 
venience to  the  owner  of  the   stock.      The   receipt  shown  in   Figure  28 


ICATE   No /  3,  /   ^     REi 

.  OF  thexa'pital  STO 


s: ^sos: 


I  X)    ^     BFPRFSFNTINfi      /  OO. 


o  address- 
Fig.  30. — Receipt  froji  Owner  of  Stock. 

has  a  good  point  in  the  wording  at  the  bottom — "Reissue  of  above  stock 
will  be  delivered  to  bearer,  or  original  stock  returned  if  transfer  can  not 
be  effected,  only  on  surrender  of  this  receipt."  It  sometimes  occurs 
that  the  transfer  can  not  be  effected,  and  in  such  case  it  is  well  that 
the  transfer  agent  should  not  ajDpear  to  be  committed  to  the  duty  of 
making  the  transfer. 

IBowlino  (Brccn  ZTrust  Co., 

standard  Oil  Building, 


26  BROADWAY.  .,  '        lS~  (jS — 


New  York, l^ i9^ 


Received  from  the  BOWLING  GREEN  TRUST  COMPANY,  the 
following  certificate     of  stock  of  the,  uUjdrO^  ^WcC^  W) . 


N^<.     /  ^3.  /  /f      -^ ^  fnr  /(^-O     ^ -— -        ^ shares, 

in  the  name  of  'o^-iM^  ^M^o^)^ 


Name.JS^l^^  0^^^^ 


Fig.  31. — Receipt  fkom  Owner  of  Stock. 


FORMS  FOR  TRLST  DKPARTMFN-T. 


ii05 


TI.e  transfer  c-ltrk  now  cancels  the  certiHcat.-  handed  in  for  transfer, 
after  satisfying  himself  that  the  transfer  is  properly  autliorized,  issues 
a  new  certificate  or  certificates,  and  makes  the  proper  entries  on  the 
Stock  Transfer  Book,  a  common  form  of  which  is  shown  in  Figure  32. 
Some  companies  have  this  book  boinul  in  permanent  form  with  an  index 
either  in  the  book  or  in  separate  form.  Others  use  the  loose-leaf  plan, 
■which  is  better,  the  index  being  in  the  shape  of  tabs  on  the  edges  of 
the  leaves.  The  record  of  transfers  for  any  number  of  companies — up 
to  the  capacity  of  the  binder— are  thus  kept  under  one  cover.  But  the 
plan  is  sometimes  followed  of  having  a  separate  Stock  Transfer  Book 
for  the  stock  of  each  concern  for  whom  the  company  acts  as  transfer 
agent.  The  general  form  for  the  pages  in  such  case  does  not  differ 
materially  from  that  shown  in  the  figure. 

Figure  32  illustrates  a  customary  way  of  making  the  transfer  en- 
tries. The  first  entry  shows  the  cancellation  of  certificate  No.  6l9  for 
fifty   shares   in  the   name  of   John    Doe,  and   the   issuance  of  certificate 


^^i:i^:.^,...y<..^....     ^. 

_  iifi'i—'jiz  ."..tr.'.'-it..*'"'  * 

:::.-::/r„-::-.-.'.:.---.r;.7:  .-.■.:;.•  .•.■r:.-.::r=7^mi-jr:}r^-. .:  r.-.v.::. 

...„r..  .,,,  .. ....,,..,... 

.  ■..■./.; :,.:......       

■!-■■ 

-.    -...r 

.■•.v. 

..,.....,  ...t ........ 

—~— 

-i;: .     ■;,- 

.... 

-- 

!  ^  J 

'[si 

■I  X  './,/-*.. 

21IU. 

.  .  J 

1 1 

>i..,;^;....  .:  .^i. — 

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Fig.  3-\— Stock  Tbaxskkr  Booi 


No.  2211.  for  the  same  number  of  shares  in  the  name  of  Richard  Doe. 
The  record  of  the  new  certificates  is  entered  opposite  that  of  the  old  one 
cancelled.  The  second  entry  shows  the  cancellation  of  a  certificate  for 
100  shares,  and  the  issuance  of  two  new  certificates  for  fifty  shares 
each.  The  third  entry  shows  the  cancellation  of  thre«-  certificates  for 
a  total  of  100  shares,  and  the  issuance  o(  one  certificate  for  the  100 
shares.  The  fourth  entry  is  a  little  more  intricate.  C\rtificates  for  ten 
and  twenty-five  shares,  respectively,  arc  cancelled;  the  ten  shares  and 
twenty  of  the  twenty-five  shares  are  transferred  to  a  new  certificate  for 
thirty  shares.  The  remaining  five  shares  are  added  to  the  twenty-five 
shares  of  the  next  certificate  cancelled,  and  issued  in  a  new  certificate 
for  thirty  shares.  The  effort  is  to  keep  the  record  of  certificates  issued 
opposite  that  of  the  cancelled  certificates  from  which  the  shares  are 
transferred,  so  fh.-it  tin-  source  of  each  certificate  may  Iv  plainly  shown. 


206 


TRUST   COMPANIES. 

STOCK    TRANSFER    BOOK. 


'^:i^^  1 

'^■'SJitt"' 

s^ 

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sS^-^ 

I5H 

(00 

on 

IOC 

n^ 

A'a   X                                                                                                            'O"          5>l^r«. 

8 

For    Value    Received,    the  undersigned  hereby  assigns  and 

transfers  unto .      _    .          '^'"'"' ^^''-^T'?" __     

Out  Hundred                                                           S^vm 

ol  the  COMMON    STOCK  of 

COMPANY. 

ol  One   Hundred   Dollars  <aih 

_ 

THOMAS  HOWARD. 
Ifja-uary. 

^                SYDNEY  SMITH.                ^^.^ 

Fig.  33. — Transfer   Register. 

The  printed  heading  at  the  top  of  the  page  reads  as  follows:  "The 
undersigned^  owners  and  holders  of  the  stock  of  the  above-mentioned 
company,  for  value  received,  do  hereby,  by  our  respective  attorneys 
duly  appointed,  respectively  assign  said  shares  of  such  capital  stock 
in  the  manner  set  forth  below."  The  actual  attorney  for  the  transfer 
in  each  case  is  the  clerk  who  does  the  work,  and  who  signs  his  name  in 
the  space  headed  "Attorney  for  Transfer,"  opposite  the  entry  of  each 
transfer. 

The  transfer  books  used  by  various  companies  show  some  slight 
changes  from  this  form.  Some  omit  the  column  for  the  "Date  of  Old 
Certificate,"  since  such  date  may  be  easily  found  if  wanted,  by  turning 
back  in  the  Register  to  the  place  where  the  issue  of  the  certificate  is 
recorded  in  numerical  order.  Some  omit  the  column  "Date  Registered." 
Some  add,  at  the  right  of  the  page,  a  column  for  the  addresses  of  the 
jiersons  in  whose  names  the  new  certificates  are  issued;  but  it  is  more 
common  to  enter  these  addresses  on  the  stubs  of  the  certificate  book, 
whence  they  are  copied  into  the  ledger.  There  is  a  difference  of  opinion 
as  to  whether  the  form  of  assignment  at  the  top  of  the  page,  and  the 
signature  of  the  clerk  who  acts  as  attorney  for  the  transfers,  really 
add  anything  in  the  way  of  legal  safeguard. 

STOCK  REGISTER. 

Slock  of  Die     U)ejAiAnx  <3^iw^-,.  Q->wJ«^...^., 


Fig.  34. — Form  for  the  Registering  of  Stock. 


FORMS  FOR  TRUST  DEPARTMENT. 


207 


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Fig.  35.— Stojk  I.k 


In  Figure  33  is  given  a  form  of  stock  transfer  hook  which  is  recom- 
mended over  the  preceding  form  by  the  committee  wliich  compiled  the* 
Book  of  Forms  issued  by  the  Trust  Company  Section  of  the  American 
Bankers'  Association.  The  book  is  made  witli  four  blanks  to  a  pag-  . 
each  form  to  be  numbered,  from  1  upward. 

The  form  used  by  a  Registrar  to  ngister  transfers  of  stock  is  very 
similar  to  the  Stock  Transfer  Book,  as  will  be  seen  by  an  examination 
of  Figure  81,  M-hich  shows  a  usual  form  of  Register.  With  the  ex- 
ception of  the  dates  of  the  old  certificates  (which  some  companies  omit) 
and  the  signatures  of  the  attorney  for  transfer,  the  entries  in  Figure 
32  are  reproduced  in  Figure  St.  In  the  last  column  in  Figure  3-t.  headt-d 
"Date  of  Cancellation,"  is  entered  opposite  each  certificate  the  date 
when  it  is  cancelled — if  it  is  cancelled.  Some  Registrars,  however,  prt- 
fcr  to  keep   a  stock  ledger  just   as  tlie   Transfer  Agent  does.      In   such 

199 


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Fio.  36. — Stock  Ledger. 


208 


TRUST  COMPANIES. 


case,  the  column  for  "Date  of  Cancellation"  is  not  needed,  and  is  omitted 
on  the  Register.  The  essential  function  of  the  Registrar  being  to  see 
that  there  is  no  o^'er-issue  of  stock,  it  is  important  that  the  footings  of 
the  columns  headed  "Shares"  be  well  kept  up,  and  that  the  difference 
between  the  footings  be  ne\'er  greater  than  the  number  of  shares  of 
the  stock  that  should  be  outstanding.  After  the  full  amount  of  the 
stock  has  once  been  issued — as  is  supposed  to  be  the  case  in  the  figure. 


.^j^. 


\A)aM^'^  S^^^-ri 


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Fig.  37. — Stock  Ledger. 

50,000  shares  being  outstanding— over-issue  may  of  course  be  guarded 
against  by  the  balancing  of  the  debits  and  credits  of  each  transfer,  as 
explained  under  Figure  32. 

It  will  be  seen  that  the  Stock  Transfer  Book  is  of  the  nature  of  a 
journal,  giving  an  account  of  the  changes  in  the  ownership  of  the  shares 
of  stock.  As  the  Transfer  Agent  must  be  in  position  to  know  at  any 
time  the  present  owners  of  the  stock,  and  the  exact  number  of  shares 


FORMS   FOR   TRL'ST  DEPARTMKNT. 


209 


owned  by  each,  it  is  necessary  to  keep  a  stock  ledger,  lour  diHerent 
forms  of  wliich  art  shown  in  Figures  35,  S6,  37  and  38.  The  forms 
shown  in  Figures  So  and  36  are  used  in  bound  books,  each  corporation 
having  a  separate  book.  That  shown  in  Figure  37  is  made  on  the  loose- 
leaf  plan.  That  in  Figure  38  is  a  card  ledger  form.  These  forms,  all 
of  which  are  in  actual  use  today,  illustrate  the  different  methods  of 
difterent  companies.  Two  of  the  forms  provide  for  information  as  to 
the  person  from  whom  shares  are  transferred  and  as  to  the  person  to 
whom  they  are  transferred.  The  other  forms  leave  this  information  to 
be  obtained  when  wanted  from  the  Stock  Transfer  Book.  Two  of  the 
forms  provide  for  balance  columns,  which  is  a  great  convenience.  In 
the  use  of  the  card  form,  Figure  38,  a  case  is  provided  for  the  ledger 
cards  of  each  trust,  with  index  cards,  and  the  accounts  of  shanholders 


..     a.^K  S;t.^^ 

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THU»T 

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T               '               ^-—^^^^ 

CtRTiriCATta    SUHBtNOtBCO                                                             Ct«Tir,C«Tt»     '■■UCO 

.H..C* 

!                            ,                          1  iG  1  /•*-  ,03  :               ai  A 

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FiG.  3S. — Stock  Ledger   (Card). 


are  thus  kept  in  alphabetical  order,  a  thing  which  can  be  done  only  ap- 
proximately in  bound  ledgers.  Figure  35  provides  for  four  accounts 
on  each  page;  Figure  3(j  for  but  one  account.  Four  accounts  may  be 
carried  in  Figure  37,  er  the  whole  page  may  be  used  for  one  or  two 
accounts,  as  circumstances  require.  In  the  card  form.  Figure  38.  there 
is  of  course  one  account  to  a  card,  nnd  a  second  card  may  be  added 
when  needed.  The  use  of  the  card  form  is  growing  rapidly.  The  lK>ok 
form  shown  in  Figure  .S.*)  has  been  widely  used  in  New  York  and  else- 
where. 

In   the   handling   of   a    trust    in    which   the   company   acts   as   trustee 
under  a  bond  issue,  the  first  entries  are  made,  as  already  stated,  in  the 
Trust  Register,  such  entries  giving  an  outline  of  the  provisions  contained 
in  the  deed  of  trust.     The  next  entries  that  need  to  be  made  are  in  the 


210  TRUST   COMPANIES. 

roi£jWuv...3/>jKv:  WU,w  'iA*-4~'^  ^r>vvW«vwv 


1.1CO    . 


i...  .».A»^    lOmt.    out    -AMft\l'il<(Ti>' _ .WTWtlTMVmi'V'sljvd^Yl    1  "^   _. 


<!    I  Oil     I    Toa  *loco 


TTm 


0^1.^1 


Fig.  39. — Bond  Register,  First  Page. 

Tickler — memoranda  of"  interest  periods,  due  dates  of  the  bonds,  sinking 
fund  payments,  date  of  record  of  chattel  mortgages,  if  any,  and  memo- 
randa of  miscellaneous  provisions  to  be  attended  to  periodically.  When 
the  bonds  arc  engraved  and  dul}'^  signed  by  the  proper  officers  of  the 
company  issuing  them,  they  are  turned  over  to  the  trust  company  which 
acts  as  trustee,  and  record  of  their  receipt  is  then  made  in  the  Bond 
Register,  a  form  of  which  is  shown  in  Figures  39  and  40.  At  the  top 
of  the  first  page  (Figure  39)  is  given  certain  general  information  re- 
garding the  bond  issue.  Under  the  heading  "Bonds  Received,"  a  record  , 
is  made  of  the  bonds  turned  over  to  the  trustee.  As  the  bonds  are  au- 
thenticated by  the  trustee  and  delivered  on  order  of  the  issuing  com- 
pany, record  of  such  deliveries  is  made  under  the  heading  "Bonds 
Delivered;"  and  the  last  column  on  the  page  shows  the  total  number 
of  bonds  outstanding  at  any  time.  When,  in  the  course  of  time,  any  of 
the  bonds  are  retired,  record  is  made  under  the  heading  "Bonds  Re- 
tired," and  the  amount  of  bonds  retired  is  deducted  from  the  last  bal- 
ance shown  in  the  column  headed  "Bonds  Outstanding."  Thus,  in 
Figure  39,  prior  to  the  retirement  of  $10,000  bonds  on  September  1, 
1905,  the  balance  of  bonds  outstanding  is  shown  to  be  $1,350,000. 
By  the  retirement  of  the  .$10,000  bonds,  the  total  outstanding  is  reduced 

1.  .  /  ^  »««»  «MllTf«  TMJI  »Oi.<'.C.£i 

««DERI.YI«8IO«D»Of....W;.,J/VvKY-^^^^*'^"'^--  - " V)' 

t1Tll.^U;.U^^.kA^1^.■^^^^..:«^U:;..■4.l^-^l.(^..r«^.^ _   TiM_l]tL/Ite..rrvM^;>..ilLi^<t-^^ 


,ll^l^<^^...^.^«>^^^pr*<>s^^ 

•0*....).....  IB  JlQ  Q  tiCff^.  EtCN.      torn  ISSUE  ft  0  O 


VN<?A.....«o«Tn«j.....v«...-»/A.rv«-..i««ii». 

TKUtTCE.    ?l*Jy!jW>,V^.Wva^_.3?.CavT^.^:ryv\ 1 

O-CCY      »0»......\...,..TO'>'i-0..$lGe.^E«eit.     t«TU  ISSUE  l'5'fG'P0( 


Fig.  40. — Bond  Register,  Second  Page. 


ORMS    I'Oll   TRUST    DFPARTM  KNT 


211 


to  $1,31().()()0.  This  rrcord  provides  tlu-  d.it:i  from  wliifh  may  he  Kariud 
the  serial  numbers  aiul  denominations  of  all  l>unds  outstanding  at  any 
time  and  of  the  bonds  remaining  unauthentieated  in  the  hands  of  the 
trustee.  At  the  left-hand  lower  corner  of  the  page  (not  shown  in  the 
figure),  space  is  jjrovided  for  the  record  of  bonds  cremated,  if  any. 
The  advisability  of  cremating  (or  burning)  retired  bonds  under  any 
circumstances  is  a  matter  of  dispute.  If  done  at  all,  it  is  done  in  the 
presence  of  officers  of  the  issuing  eomi)any  and  of  the  trustee  company, 
all  of  whom  sign  in  duplicate  a  "Cremation  Certificate,"  their  signatures 
being  duly  witnessed.  The  Cremation  Certificate  reads  ns  follows:  "This 
is  to  certify  th.it  we,  the  undersigned,  have  this  day.  in  the  presence 
of  each  othei,  destroyed  the  following-described  securities  by  burning 
the  same  to  ashes,  viz."  Then-after  follows  a  detailed  description  of 
the  securities  burned. 

It    often    hajipens    that    there    are    otlic  r    bonds    mid.  riving    a    giv.  ii 
issue    of    bonds,    and    in    this    form    of    Bond     Register    the    reverse    side 


-^ 


'7' 


BOffoe  DKLrrERrr 


.^,/  l....r.. 


Fig.  W. —  Bosi)  Hki.istkh. 


of  the  leaf,  shown  in  Figure  10,  is  arranged  for  the  records  of  the 
underlying  bonds,  if  any.  The  entries  show  that  at  the  time  of  the  issue 
of  the  $'..'. 000, ()(>()  bonds  of  the  Inter-Urban  Traction  Company  there 
were  outstanding  two  series  of  underlying  bonds,  amounting  to  .'t'lOO.OOO 
and  $'2.10,000,  respectively.  As  these  underlying  bonds  are  retired, 
record  is  made  in  the  spaces  shown.  This  book  is  made  on  the  loose- 
leaf   pl.wi. 

Figure  1-1  shows  another  form  of  Bond  Register,  used  by  ;in  e:'stern 
company.  The  chief  ditl'erence  between  this  and  the  form  shown  in 
Figure  .'i9  is  that  in  this  form  provision  is  made  for  the  record  of  bonds 
certified,  in  addition  to  the  record  of  bonds  delivered.  This  form  could 
be  improvtd  by  the  addition  of  a  column  showing  the  amount  of  lv>nds 
cutstanding.  although  such  balance  may  of  course  be  figured  from  the 
data  given.  This  form  is  made  up  in  a  permanently  liound  book,  and 
tJie  opposite  folio,  which  has  a  simple  record  journal  ruling,  is  used  for 
memoranda    of   bonds    retired   and    of   any    otiur   matters    of    importance 


212  TRUST   COMPANIES. 


o.„ 

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Fig.  4^. — Bond  Register  with   Abstract  of  Trust  Deed. 

aft'ecting  the   account.      The   same   form   may   of   course   be   adapted   to 
use  in  a  loose-leaf  binder. 

Figure  42  shows  a  form  of  Bond  Register  which  includes  space  for 
an  abstract  of  the  trust  deed  under  whicli  the  bonds  are  issued.     With 

/.CO    . 

BONDS 

OF  THE 


\os.^O  I     lo...^O-fy  ..inclusivt 
s.r^ur,OfcJR:m.S. 

S^a^OK <AJ^X 

f/umitrs  t)if.    VS,'/Mn..O _ 

ari,fi„u.  o if  .  A. -.yC  A  >  ... 

OU.OK O^....^..    ....,,, 

Fig.  43. — Memoranduji  Card  for  Packages  of  Boxds. 

some  slight  changes  in  the  wording  at  the  left  of  the  page,  this  is  the 
form  given  in  the  Book  of  Forms  issued  by  the  Trust  Company  Section 
of  the  American  Bankers'  Association.  At  the  bottom  of  the  page  (not 
shown  in  the  figure),  provision  is  made  for  a  record  of  the  names  of  the 


FORMS  FOR  TRUST  DEPARTMENT.        213 

officers  who  executed  tlie  deed  of  trust  for  the  mortgagor  company  and 
for  the  trust  company,  and  for  tljc  date  wlien  all  bonds  are  reported 
redeemed.  The  right  half  of  the  page  calls  for  about  the  same  infor- 
mation as  that  called   for  in    Figure  41. 

Before  certifying  and  delivering  bonds,  the  trust  company  must  of 
course  be  certain  that  everything  necessary  has  been  attended  to.  A 
convenient  way  of  handling  the  work  is  to  have  the  Iwnds  done  up 
in  packages,  and  a  card  like  that  shown  in  Figure  l-a  attached  to  each 
package.  Before  the  package  is  tied  uj),  trusted  clerks  examine  the 
bonds  for  particular  features  and  certify  to  their  correctness  by  placing 
their  initi.-.ls  on  the  card  as  shown  in  the  figure.  Thus,  "R.  M.  S."  has 
satisfied  himself  by  examination  of  the  bonds  that  the  signature  of 
the  proper  officer  of  the  corporation  and  tlie  seal  of  the  corporation 
appear  on  each  bond,  and  that  the  bonds  and  coupons  are  consecutively 
nr.mberod  as  stated  on  the  card.  "A.  K.  R."  has  examined  the  bonds 
and  found  that  the  certificate  of  the  trust  company  as  trustee  has  In-en 
signed  on  each  bond  and  that  the  count  of  100  bonds  in  the  package 
is  correct. 

'^'°*  REQUISITION   FOR  BONDS. 

'M^f^^K .TRUST  COMPANY  OF.^fec^Lrfo .-Trustee. 

Please  authenticate  under  the...  L^'-^L _  Mortgage  of 

this  Company.  dated_;^^^j!Lfc I =:nr-__i90.aSl, LyO-O  Bonds 

$/.<SrO^^ each.  Nos. / .to.-  ./(T  C  C inclusive,  bearing  coupon 

due    'Xi/:^,  \ ,  \<^oip   .and  subsequent  thereto,  and  deliver  the  same  to  the  order 

/"J        ^ O^  '  utjsi  ^yJii^l  rpTL^  oynxTUy  (j^ , 

%mrO,Ot><^^^.- By  .j/qO.  iOc^^^i^^^^^^ 

Fig.  44. — Reqvisitiox  fob  Bonds. 

Some  companies  have  a  blank  Requisition  for  Bonds,  which  the  cor- 
poration issuing  the  bonds  is  expected  to  fill  out  and  hand  to  the  trust 
company  when  it  desires  some  of  its  bonds  authenticated  and  delivered. 
A  form  for  such  a  requisition  is  shown  in  Figure  44.  This  matter  is, 
however,  often  attended  to  by  letter  or  even  by  telephone,  and  in  any 
event,  the  bonds  are  of  course  delivered  in  accordance  with  the  pro- 
visions of  the  deed  of  trust.  When  the  bonds  are  delivered,  the  trust 
company  takes  a  receipt  for  them,  in  a  form  like  that  shown  in  Figure 
45. 

With  reference  to  the  matter  of  the  payee,  bonds  are  either  reg- 
istered or  coupon  bonds.  Registered  bonds,  strictly  so-called,  are  rarely 
issued  in  this  country,  except  by  the  National  Government.  Coupon 
bonds,  both  principal  and  interest,  are  payable  to  bearer;  but  provision 
is  usually  made  for  the  registering  of  such  bonds  as  to  principal  or 
interest,  or  both,  at  the  option  of  the  holder.     The  trust  company,  acting 


214 


TRUST  COMPANIES. 


Received,  New  York,  i:i^vj9-A.^.    /  190  T^,  from  the 

BOWJjING  GREEN  TRUST  CO..  New  York,  Trustee,       >5~  O  O  Bonds  of 

.<y^^'*'^^k^!^r-J^  .« 

$A0-O:<?.'~..«^.  ..each.  Nos. .-.  /-.^ .^.    ..  .Ao^.  "^.^^ inclusive,  duly 

authenticated  by  said  Trust  Company  as  Trustee,  under  the  _  .•^'*-^'^-^^.  - 
Mortgage  of  said  Company,  dated    9^\JU^  I  ,  l*^0>f  Coupon  No.      ' 
o(ykv>v,|, I<^(li5  and  sub^iequent  ther'eto  attached.  /?  ^         i        /^ 

$SOO,OitO:- By   ^ _ 0^^   '^^^^^   ^ 

Fig.  45. — Receipt  for  Boxds. 

as  trustee  under  bond  issues,  must  therefore  keep  a  Record  of  Bonds 
Registered,  a  common  form  of  which  is  shown  in  Figure  46.  Other 
forms  of  this  record  provide  a  separate  cohimn  for  the  address  of  the 
payee,  and  some  provide  a  column  for  the  name  of  the  officer  of  the 
trust  company  by  whom  the  bonds  were  registered.  If  the  bonds  are 
registered    bonds,    the    bond    numbers    should    appear    in    the    record    in 

REOISTERED   BONDS  OF 


%Jh*..^'iA<ir-JJri'a'i^  O/ut^i^..  (zi. 


^^^^-iff^^- 


1^ 


1 '>.(,&,..««:  . 


Fig.  46. — Recohd  of  Boxds  Registered. 

consecutive  order;  but  if  coupon  bonds,  only  a  few  of  which  may  be 
registered,  such  order  is  not  important.  The  book  should  be  made  on 
the  loose-leaf  plan,  to  avoid  waste  of  space  where  only  a  few  lx)nds  of 
a  given  issue  are  registered. 

Figure  47  represents  a  card  form  for  a  Record  of  Bonds  Registered. 
The  cards  are  kept  in  a  case,  an  index  card  for  each  corporation  whose 


ncaisTiDto  *•  ToOrVv^CYli^       c«i»o  i 
o„o-».-no»  or  .o»o..  •I&OO'^ 


^  X^OS 


O-'V^.^.x^A^ 


i  ■MitTtira 


9    3^03       <^jUOvJ2-1, 

o 


loo  I  fooo 
S'O  Xooo 
I  ooo 


Fig.  47. — Record  of  Bonds  Registered. 


FORMS  FOR  TRUST  DEPARTMENT.        215 


fj  Coupon    Record! 


Uond    NunttMi-a 
Coupon*    l'nl<l 


ii± 


-^-^^f.  ' 


/hI.  'Uts^.Uf^  -y 


:i^ 


Fig.  4ft. — Coupox  Recobd. 


bonds  are  registered  being  provided.  After  the  inde.x  card  are  inserted 
the  individual  cards  in  alphabetical  order  of  the  names  of  the  holders. 
This  form  has  the  advantage  of  showing  both  tin-  transferer  and  the 
transferee  of  the  bonds. 

In  the  handling  of  coujjon  bonds  the  trust  company  is  called  upon 
to  act  as  agent  for  the  payment  of  coupons  as  they  mature,  and  there- 
fore has  need  of  a  coupon  record,  a  form  of  which  is  shown  in  Figure 
48.  In  Figure  12  has  been  shown  a  form  combining  a  coupon  record 
with  a  coupon  ledger  account.  xVs  there  stated,  the  combining  of  the 
two  records  is  a  great  convenience  and  time-saver.  Many  companies, 
however,  keep  the  two  records  separately.  It  will  be  seen  that  the  form 
for  the  record  of  bond  numbers  of  coupons  paid  at  the  right  of  Figure 
*8  is  identical  with  form  at  the  right  of  Figure  12,  and  its  use  has 
there  been  explained.  It  need  be  added  here  only  that  the  use  of  this 
form  is  a  decided  protection  against  forgeries,  as  it  shows  at  a  glance 
whether  the  coupon  from  a  given-numbered  bond  has  been  paid.  The 
balance  of  Figure  48  is  self-explanatory.  It  is  not  always  possible  to 
learn  the  name  of  the  owner  of  the  coupons  presented,  especially  when 
a  large  number  of  coupons  comes  through  another  bank,  but  it  is  of 
advantage    when    possible.      Although    coupons    are    payable    to    bearer. 


21 


■^aiLtte 


(Qa.r^>A/^ 


/^''Ui. 


iT 


^.'^^M^<<^/ 


OJ^ 


[/J^  ^»I^^4. 


A:^ 


Fio.  49. — Coupox  Record. 


216  TRUST   COMPANIES. 

many  companies  make  an   effort  to  learn   the  name  of  the   person  who 
presents   coupons  for  payment   at  the   counter. 

It  is  often  of  great  advantage  for  the  trust  company  to  have  a 
list,  even  if  not  complete,  of  the  holders  of  the  securities.  If  a  refund- 
ing plan  is  to  be  carried  out,  or  when  under  the  sinking  fund  pro- 
visions, the  funds  held  are  to  be  used  for  the  retirement  of  bonds  at 
certain  periods,  if  a  list  is  at  hand,  the  trustee  may  communicate  direct 

TRUST  DEPARTMENT.  a^ 


Chicago,^  .  OU..AQ^ .  9o>r 

dhL   g^^^(^-r-  lXr/>a-y^  Jrtt^^hl^  C^ .  wf 


Gknti.kmen;  -Wc 


L-nd  you  herewith  ..  .3  3.p J_Coupor.s.  for  >  ^  >S  .— 


each,  amountinK  to  f-O  ^Q..Q^~-..  ,  from  bonds   of  your  Company,  as  set    forth  in  receipt 

hereto  attached,  duly  paid  and  cancelled  by  us. 

You  will   please. have  said  receipt  properly  signed,  detached  and  returned  to  this  Bank. 
Yours  truly, 

ILLINOIS  TRUST  &  SAVINGS  BANK. 


t^^OO.— TRUST  DEPARTMENT. 

CHICAGO  /\      J  (— 

'KeCClVe^  of  It  I  ino/sTiuistS(  Savim.s  liANK,  the  following:       "  r>   X  /?      r" 

^■XH        r,.„nnn.N,>       *]  for  %2jS^- each    for  interest   due-.  C/CLt-.  I  j.'^CKT 

on  bonds  of.-_m-^.'5^\-"^H'-X'CrA<»;yv^,  OrDLCtAdv   ^Ta^ 

kai<jjQ.jiwciuAiv^^_z.-4^3 _    -p-~<s / --^-- 

•  luly  paid  and  cancelled  by  sai.l  Hank  <u1r^     e^dtf-, —  ^'"'^■*r>x_aT^^i^    ^r^_ 

Fig.  50. — Coupon  Enclosube  Form  and  Receipt. 


FORMS  FOR  TRUST  DEPARTMENT. 


'21', 


Mith  the  lioldcrs  of  tl)e  bonds,  instead  of  relying  upon  advertisements. 
Jf  such  a  list  of  holders  is  obtained,  however,  it  must,  of  course  be  used 
with  extreme  care. 

Figure  19  shows  another  form  of  Coupon  Record,  M-liich  differs  from 
that  shown  in  Figure  48  cliiefly  in  the  manner  of  recording  the  bond 
numbers  of  coupons  paid.  This  form  shows  more  clearly  the  coupons 
presented  by  each  customer,  but  makes  it  much  more  difficult  to  learn 
whether  a  given  coupon  lias  been  presented. 


» 

«».» 

-? 

•==.- 

T 

.m^ 

«... 

r-ci   -L  ico  .vd?. 

"f. 

CS 

>cc 

'^ 

z 

roc 

I 

soH.jei.jKi-jjf.sUi.JiJ^yhr 

iffl 

w 

>i 

3S. 

3<ro 

itlf.  t   M-lS.^'c(., tlio  fen*-^ 

% 

OS 

IS- 

*s 

1 

'TIS 

, 

*«|-fc«irOi«l,«-ti,a»,f« 

"t, 

CS 

i3 

iS 

2 

37«S 

•601  fc  iofc<i  i^-i. 

% 

CS 

'■'1 

■u? 

4-ta 

sn 

;iia,iiH(_ii»T,iiij3,ii»+ 

'V, 

0^' 

/.'■i 

k3 

i-O 

3cn,Su»,Si1-3aX  334,  iqn,^^ 

*'' 

fti 

u 

iS 

300 

3el,JM,  3,^-  JiT. 

*/» 

'" 

iS 

2aJ- 

6 

IOC 

YiG.  j1. — Coupon-  Enclosciie  Fokm  and  Receipt. 


At  convenient  intervals,  or  upon  the  request  of  the  corporation  issu- 
ing the  bonds,  the  coupon  clerk  returns  the  paid  coupons  (which  have 
been  cancelled  as  paid).  Trust  companies  usually  have  a  printed  form 
for  such  remittance,  consisting  of  a  letter  notifying  the  corporation  of 
the  remittance,  accomiianied  by  a  receipt  to  be  returned  to  the  trust 
company.  Two  such  forms,  which  explain  themselves,  are  shown  in 
Figures  50  and  51.  The  form  shown  in  Figure  ol  is  of  advantage  where 
coupons  of  different  denominations  or  of  different  numbers  are  to  be 
sent  in  the  same  letter,  as  often  happens. 


218 


TRUST  COMPANIES. 


A  trust  company  needs  some  means  of  keeping  record  of  the  fees 
charged  to  and  paid  by  its  customers  in  the  Corporations  Division  of 
the  trust  department.     In  the  Estates  Division  of  the  trust  department, 


'VU.  J/tUha^- MaW,s^  '\aA/cA~t>vj  -X)  (rvvvb.(L>^- 


Fit  kCOOtM 


N0.1   OO 


AOOniS. 

-     1                                                               — 

-1 

OI>lt         1 

CO,      1 

«LA«0.        1 

11     T 

/ 

'lOor 

r. 

■ 

-Jo/^ 

\> 

to  (Lot-  J~>^» 

7.ir  1 

c 

3l" 

h  1 

^A^'-.'.^-'-^^.wv^f^^.if,-,^*!      i"^3iio"cB'^'1. 

h3^\ 

y/^ 

\  >  1 

-Vd  b^Jij  Kt^'^ 

if'f 

3! 

c 

Fig.  52. — Fee  Ledger. 

fees  are  usually  charged  on  the  regular  accounts.  Figure  52  shows  a 
form  of  Fee  Ledger.  This  is  a  card  ledger,  the  cards  being  kept  in 
a  case,  arranged  alphabetically  with  index  cards. 

INCOMING  REGISTERED  MAIL  AND  EXPRESS. 


3H    fv,^(. 


Fig.  53. — Record  of  Incomikg  Mail  axd  Express. 

The  record  of  registered  mail  and  express  received  by  and  sent  from 
a  trust  company  concerns  all  departments  of  the  institution;  but  the 
trust   department   is   so   much   concerned   with   the   record   that   it  seems 

Registered  Mail,  and   Express.  


6    T^ti 


/CO    ^^>L 

C  civ  ,  n(.  ^ 


3  fr^-^X*' 


OA.'M. 

«.s.a. 


'/.4r 


Fig    54. — Record  of  Outgoing  Registered  Mail  axd  Express. 


best  to  include  this  form  here.  Figure  53  shows  a  form  for  the  record 
of  incoming  packages,  and  Figure  54  a  form  for  outgoing  packages. 
These  records  are  very  valuable  if  not  indispensable. 


FORMS   FOR   TRL'ST   DEPARTMENT. 


219 


ijiii 


m 

!< 


Ill  II  III  mil 


^ i 


I 


220 


TRUST  COMPANIES. 


Sundry  Forms  for  the  Estates  Division  of  the  Trust  Department. 

For  the  Tickler  of  this  division  of  the  trust  department,  the  various 
forms  already  shown^-  are  adapted,  the  card  forms  being  the  most  con- 
venient. Other  cards  may  easily  be  added,  suited  to  special  needs.  Fig- 
ure 55  shows  a  form  that  is  in  use,  and  is  very  convenient  for  tickling 
items  of  income  regularly  recurring,  and  for  other  uses.  The  arrange- 
ment for  dates  at  the  top  of  the  card  saves  much  time  and  writing. 
Where  an  item  is  to  be  attended  to  on  the  first  of  each  month,  for  ex- 
ample, the  figure  1  is  inserted  under  the  name  of  each  month;  after  the 
item  has  been  attended  to  for  one  month,  the  card  is  moved  forward  in 
the  tickler  case  to  the  next  month. 

An  important  form  is  the  Record  of  Securities  held  in  the  various 
trusts.      Figure  56  shows,  with   some  slight  changes,  the  form  for  this 


Jan       Feb       Mar       Apr       May      June      July       Aug       Sept      Oct       Nov 


Dec 


Trust 


Investment 


^?NU.'r.?^^r?yhvi4l.  interest  . on  $ 'S.0rO:t2%r. . . . . @  . . ^. 


Trust  Investment  Income. 


$.im^. 


Fig.  55. — Tickler  Card. 


record  given  in  the  Book  of  Forms  of  the  Trust  Company  Section  of  the 
American  Bankers'  Association.  One  double  page,  or  more  if  necessary, 
is  devoted  to  the  securities  of  each  trust.  This  book  is  designed  to  serve 
as  the  ledger  for  the  securities  account,  in  the  space  provided  at  the 
right-hand  side  of  the  form.  Certain  memoranda  are  called  for  at  the 
top  of  the  form  that  are  usually  included  either  in  the  trust  register  or 
in  the  memorandum  page  at  the  beginning  of  the  account  for  each  trust 
in  the  Trust  Ledger.  They  are  not  needed  in  all  of  these  records,  and 
will  naturally  be  omitted  here  if  given  elsewhere.  The  size  of  the  pages 
is  21%  by  18  inches.  The  book  is  provided  with  an  index  at  the  front; 
or  a  separate  index  may  be  used. 

Many  companies  keep  the  Record  of  Securities  in  card  form.    Figures 
57,  58,  59  and  60  show  the  set  of  card  forms  used  for  this  purpose  by 


72  Figures   23-26   inclusive. 


FORMS  FOR  TRLST  DEPARTMENT. 


•221 


TRU 

ST  9xj±:ii5,  rv^v 

M^rr^ 

.^c7?.vAUk. 

a/     ..-Tr-r.,«..«^'?«/.,.,r92^ 

.lAAP^^r^  .    K^,^^AU3.A   '^^-^^Uxyf^Ci^^.     1  ii     i 

v.-^.-r*^.  T 

L„ 

DATE  or  BONOS    "^tA^S-vf   1  ,  1^  OO                  „,„  OF  Jatuhity    '  kL^  .A^  .  \Q  i\  tU 

fSfoTE 

■u»n 

»».»; 

^^- 

emu 

C>fMM*M. 

•MMt 

WM  ■•»■.«» 

^Ctzr 

. — 

•MIVUM 

-L, 

2c 

%}!-  an-i 

,T 

-S'o-oio 

'li'i 

_^i6i  6-.- 

~ 

LI 

Fic.  .)7. — Card  Uf.cord  oi    Secuhities — Boi 


DIVIDEND  eEwioDS   9i/n-f-<'^^''-^'^-^^.    /  rKikmiJl  hT  f^L^^^UfyA 


4D  ^ERIOI 


^■^'■4^r^..(/<?(X^        /  g!t~PWCrEWWED  STOCK 


tW 


diaiU-ao 2flj2C; 


M_ 


CwrMaalMtl     OlIitaH      Mih* 


Fig.  oS. — Cahd  Recoro  of  Securities — Stock. 


TRl 

ST 

f, 

.'t 

.1  i' 

i' 

o! 

v^^r-.. 

A  A. 

CR 

v>^'.. 

<  f 

-i  > 

RE 

»t  ESTATE  LOAN 

..,M= 

NEOTo    <a<-......j"^V<  :^v.Cti^ 

ADDRESS 

-  in^,.:-.  ^^.v....^..u..../.i^a^^. 

TIME          1    H^o^,~       «*TE      <,     ^X,                                                                                                   ^AVMENr.O.    INTEREST       GJc^Ol^.  v.. , 

-              ' 

i-TCOT, 

— 

O.TT 

— 

"-- 

r 

-- 

...^r 

<? 

ir 

ou 

/, 

^v 

,; 

/vT 

'-; 

^,v 

-;.■ 

i\' 

, 

/"■' 

3,- 

;;.r 

-V 

^■, 

,'-'■' 

.^i- 

ic 

f 

^^ 

i"'<i 

.7 

r^ 

2t 

1 

1 

Fic.  59. — Card  Record  of  Securities — Real  Estate   Loaxs. 


,-..„     r.i  trJj-  c^xlf  C  rc^v.^<0^  .  Ji^tLv^^ 

llv^/a^..^  .^^rf?   Y    ^r^^-^^'^  "'^  ^.v^' 

>.cb.i  ■^H.j^jiti.u^ill^tti-v^o  ^a^.^.a-iw)-  .i?6Y, 

Arr- 

<^f— 

^avA', 

O-rty^s^W.'.,    <V    >v«   ^U.i         CfitoV.J  a-f 

1 

'     0 

Vxc.  60. — Card   Recoro  of  SECURirtrs — Notes.  Etc. 


222 


TRUST   COMPANIES. 


eONDS 

(^r^-f7::nO    ^-^inyrzA 

ii/^.^. 

/^d-'kt-h^ 

v^.<; 

..._m,£_ 

..„.„.  „.  n.,„„„.  n...  ^    ^i  0UrL.<,     1     ^<  CU^.'f^f           „„.    ^  Y„ 

■]  ^..^ 

...... 

~ 

O.T. 

r  .c.... 

.OL. 

'"'""•• 

~ 

zz 

.....o.        1 

•^/Ot^tW, 

llcri.  1^5-130^  A3lt,3.3n. 

(/i, 

MA 

;  iS^-J/f 

Soo 

,.•», 

M,^ 

'^•'^ 

^OC 

Fig.  61. — Card  Record  of  Securities — Bonds  oe  Stock. 

REAL  ESTATE  LOAN  Ne.    'S' 


1-0  ^JSLon^,.  Ul\  Oo-v\A.>-r(>Hj^ 

iq 

(kd^^u. 

...r^(j            d...^/.,....,. 

y\  .   Du.  *//-if  A.r  R.Tt  /c  "Yp        wt.  Dur^..,;  ^^:^t 

...cr^.o-  ..  ..0...T, 

..T. 

«.., 

CO,, 

.....c. 

S-O    .    I^-O   rm ...... ..?U3   (2ay\-:fct<- ^, 

IS- 

H 

.. 

o. 

f>r7  0 

,- 

loo 

.miisK,  .<  <fen^w^  -r^..<  .rf             *  ..«  I  aoOO^       BLMS  i  /f^OO"^ 

(C- 

f" 

v< 

/ 

0;7C 

a 

7(7C 

SUILDKO        |t(-       CJ                                      IMIlInX/f  T 

TRUST  ^<^,  ^..T^s^^^BrruAV No. Ml 

- 

_ 

— 

-- 

Fig.  6J. — Card  Record  of  Securities — Real  Estate  Loans. 

one  large  company  h.-iving  many  estates  in  charge.  The  first  three  of 
these  forms  explain  themselves.  The  fonrth,  shown  in  Figure  60,  is  used 
for  the  record  of  any  securities  other  than  bonds,  stocks  or  real  estate 
loans.  For  example,  estates  are  often  received  in  trust  which  are  the 
owners  of  unsecured  notes,  or  of  time  loans  secured  by  collateral.  The 
size  of  Ihe  cards  is  8  by  61/2  inches.  They  are  contained  in  a  case  which 
is  provided  with  index  cards  bearing  the  names  of  the  different  trusts,  ar- 

INTEREST    RECORD 


,. 

AMOUNT 

PAID 

TO 

....  1 

^ 

1^ 

0?- 

L 

1"=^ 

? 

1^ 

0^ 

^ 

f.V 

07> 

(p 

vS- 

7 

^"^ 

0? 

3 

f«^ 

o/f 

(r 

>s 

<i 

/^ 

OU 

^ 

(S 

Olj- 

(c 

fT 

q 

10 

oil 

Fig.  63. — Record  of  Interest  on  Loans. 


FORMS  FOR  TRUST  DEPARTMENT. 


223 


ranged  in  alphabetical  ordtr.  The  y  may,  of  course,  be  arranged  numer- 
ically by  the  numbers  of  the  trusts  if  preferred.  In  Figure  6l  is  shown 
another  card  form  designed  to  serve  for  the  record  of  either  bonds  or 
stocks;  and  Figure  62  gives  another  form  for  the  record  of  real  estate 
loans.  The  back  of  these  cards  contains  a  form  for  the  record  of  interest 
or  dividends,  that  for  interest  being  shown   in   Figure  63. 


■f-Kilsr     fitrfc    cs^  uV^nrc^^Ov.  t<W^,.^.' 

"Par  or  Sha.t€S 

Curried    a-t 

/^-YnOVJTvt    Kelcl 

^% 

^ooo 

oo 

Fio.  64. —  IxDKx  TO  Skcvhitiks  Hki.i)  i.v  Trust. 


THt  CIJIZtMt  lAVINOl  «NO  TmuST  < 


O^ic.^  'i^«c^  ^-1.^  ^-^.yc^ip^  oC.,    C-f.  (Z^^L.. 


T^ 

MA^t1,r,nA,. 

■^ 

.,,     L  ^ 

BALdrntt 

^/rtrl^ 

'  a  iq^.. 

0.^^^ 

h-      r  - 

._ 

m 

-^. 

-   M^:^ 

■i        ( 

^.Inf 

(KO.  (U.7e;^ 

^       I 

:T  ^ 

i 

Fui.   65. — I.IKE  Ledger  ok  Securities  Heij)  ix  Trust. 


^T»T«<C 


-^- 


OKflMl  Anouni  ol  Band  <  J~ii««.—  t«n»«lt  ■   7l*r  I ',     /f/t 


•a 

!< 

..» 

..i-... 

— • 

J.-l 

nM 

,  -     ' 

-Jv'-rl  - 

\/,, 

I"'! 

1 

1 

— 

.... » 

__ 

..-.>. 

. 

I  /  /  »  ^V 

>!al             IT 

'  /  '  3  J  "j 

sf  ..  j 

1 

1 

Fig.  66. — Record  ok  Securities — Mortgage  Loans. 


224 


TRUST  COMPANIES. 


These  records  give  complete  lists  of  all  the  securities  held  in  each 
trust,  but  in  order  to  know  the  amount  of  any  given  security  held  in  all 
the  trusts  in  the  department,  it  is  necessary  to  provide  another  record  in- 
dexed according  to  the  securities.  Figure  64  shows  an  index  card  for 
such  use.  Its  use  is  merely  to  serve  as  an  index  to  show  what  trusts  hold 
any  given  security,  and  how  much  of  it  they  hold.  The  total  amount  of 
the  security  held  by  all  the  trusts  must,  of  course,  be  found  by  adding 
the  amounts  on  the  several  cards  filed  after  the  index  card  for  the  se- 
curity. Some  companies  keep  a  regular  line  ledger  for  securities  held  in 
trust,  a  loose-leaf  form  for  which  is  shown  in  Figure  65. 

Loose-leaf  Records  of  Securities  are  used  by  some  companies,  and 
Figures  66  and  67  show  the  first  and  second  pages  respectively  of  a  form 
for  the  record  of  mortgage  loans  used  by  a  New  York  company.  This 
record  permits  of  more  detailed  information  than  is  usually  given  in  a 
card  system. 


JfAu  X.  J^cOf ., 


Recorded  L.ber      //  Page.      VJ"  Date      71,^.    /  O', /^,o.      <S.    ^~  '3'.  7^.  ,    ,lUj  ^    (f  ^.  >d  S., 

SmiIoo      I,  Block  ^J.  q 


Resorted       .X. 


.1^~-^^  ■ 


^J.'^.-f...ArS./^f^  »4«fe. 


Jox.yx 


^  ^I^Jjj./fcir.  Examined  and  approved  by    C..._,*«S5:  Valued  aey//,,^^,  ^ 

Fig.  67. — Reverse   Side  of  Leaf  Shown  in   Fig.  66. 


Usage  seems  to  vary  greatly  in  the  matter  of  record  of  real  estate 
held  in  trust.  Some  companies  depend  for  a  complete  record  of  such  real 
estate  upon  the  rent  book  and  the  tax  book — in  addition,  of  course,  to 
the  original  entries  in  the  Trust  Register  and  in  the  ledger  accounts  of 
the  trusts  concerned.  Other  companies  add  a  complete  list,  in  separate 
form,  of  such  real  estate.  Figure  68,  (page  219)  shows  the  form  of  Real 
Estate  Record  given  in  the  Book  of  Forms  of  the  Trust  Company  Sec- 
tion of  the  American  Bankers'  Association.  The  book  is  provided  with 
an  index  in  front. 

Figure  69  shows  a  card  record  for  real  estate,  giving  about  the  same 
information  as  that  given  in  Figure  68,  and  adding  a  plat  of  the  prop- 
erty.   Additional  information,  if  desired,  may  be  put  on  the  back  of  the 


FORMS  FOR  TRUST  DEPARTMENT. 


2*5 


card.  These  cards  may  cither  be  grouped  according  to  the  trusts  own- 
ing the  property,  or  be  arranged  alphabetically  according  to  streets.  If 
the  former  plan  is  adopted,  an  index  by  streets  will  be  needed  to  make 
the  record  complete;  and  if  the  latter  plan  be  fojlowed,  an  index  by 
trusts  owning  the  property  should  be  added. 

The  form  for  the  Record  of  Rents  recommended  in  the  Book  of 
Forms  of  the  Trust  Company  Section  of  the  American  Bankers'  Asso- 
ciation is  given  in  Figure  70.  This  is  made  up  as  a  loose-leaf  book,  the 
pages  being  arranged  numerically  as  to  trusts  and  alphalx-'tically  as  to 
tenants  in  each  trust.  Another  form  of  Rent  Book  is  shown  in  Figure  71, 
in  which  pro^•i.sion  is  made  for  the  record  of  expenses  on  the  premises 
rented.      Some    companies   elaborate   the    records    in    the    rent    book    still 


.St 


rtt±       i.Oa.^JLC'y^Cf^lj^X 


g 


No  3 


±^ Svblct  H^ a.i^ut  IIS. 


Dfsc 


Jo< 


w 


i 


-■^Ajjj^^ 


S.-f 


Valna.t  .'  e  r» 


"Re-nt/  *t  . 


J^ 


Irggj 


T>-v;5t     fztrfg    i>^.4Uir^^.(R  4^^M^4.    Nn.    n^l' 


-fv. 

ftuS.^U 

v, 

Tr, 

(f 

C1 

<,A 

-s,* 

Fig.  (iP. — Cahi)  Rkal  Estate  Record. 


further,  showing  expenses  in  two  columns,  headed  "Repairs"  and  "Sun- 
dry," and  also  providing  a  column  for  the  record  of  sundry  receipts, 
such  as  repayments  of  water  rents,  etc.  Figure  72  shows  a  rent  record  in 
card  form,  the  cards  being  five  inches  wide  by  eight  inches  long. 

Companies  handling  a  number  of  trusts  which  are  the  owners  of  real 
estate  are  of  course  compelled  to  look  after  a  great  many  fire  insurance 
policies,  seeing  that  all  buildings  are  covered  by  sufficient  insurance,  and 
that  policies  are  renewed  in  due  season.  For  proper  attention  to  the 
matter  of  renewals,  reliance  is,  of  course,  placed  upon  the  Tickler.  Some 
companies  file  insurance  expiration  cards  in  the  general  Tickler  of  the 
Department,  while  others  maintain  a  special  Tickler  for  insurance  ex- 
15 


226 


TRUST  COMPANIES. 

RECORD  OF   RENTS. 


Henry  A.   J^iJliams  Estate 


_per  Year,  Payable  S  'S-QQ  _ 


Wattr  i  fM              oer  Year.  Payable  t  '  >}              per   O-'t'r 
Lease  Commences   A'om             Expires                    "Vacated' 

— "y- 

i. 

Fig.  to. — Rent  Book. 


pirations.  Figure  73  shows  the  form  of  a  card  used  for  such  a  special 
Tickler.  This  also  serves  as  a  complete  list  of  all  insurance  carried  in 
the  department.  Some  companies  keep  in  book  form  a  complete  insur- 
ance record,  and  Figure  74,  (page  219)  shows  a  form  based  on  that  given 
in  the  Book  of  Forms  of  the  Trust  Company  Section  of  the  American 
Bankers'  Association. 

x,„„.  .Uj:^A^.Mih^.-s.:. 


No....!^li-...Cyia.vv^.Sf,...„ „, 

Rent.  $52.^ per.*A^>sSCpayable  in  advance. 

■  Lease  Expires  ...Q^.lL30,.i':\..Q.k.,. 


Interior  Repairs  by 
Exterior  Repairs  by 
Water  rent  paid 


i,y^a/^iZi 


,Ouri-i 


_jap^     -        """V    --     

BSNT.  DR. 

1(1.1 

'.,. 

TkT 

r^\   hrlL.^f 

,^? 

'¥- 

1 

,3? 

%Jl<3U(l     .,    il.l 

3<f 

%^^  \     ..   'i-.t.     1 

32 

4,... 

3? 

^ 

/ 

1 

(M(.LM  Y^SaMM  |&  FaUFnst  (^6    FM  Bk»  / /O  Tu  Val.  at  Uids.  t;9^I>0  —  01  BM(k  t/(30O!£    TUil  Tu  Val,  S/3UO  ~    ApvaiH<  V^I3>^00 


Fig.  71.— Rent  Book. 


FORMS  FOR  TRUST  DEPARTMENT.        227 


S 


O'^^^S' PER          ■\xA^<d^ 


:r\\jLy 


WATER  RENT 


^c?^ 


VACATED 


REMARKS 





"°^T^.u 

DAY 

RENT  PAID  TO 

AMOUNT 

^ui 

■^l 

'^dai.\ 

^ 

s- 

^^ 

■\ 

l.J.    1 

-> 

^ 

(  V 

^ 

i.^ , 

p  sr 

u    ^ 

Fig.  7^. — Kent  Uecoku  ix  Cahd  I'oEii. 

The  exact  form  of  the  Tax  Book — in  which  property  upon  which  the 
trust  company  is  to  pay  taxes  as  agent  or  trustee  or  in  other  capacities 
is  listed — will  vary  according  to  local  conditions.  The  forms  given  here- 
with are  adapted  to  use  in  the  State  of  Ohio.  Figure  75  shows  a  form 
for  the  record  of  taxes  on  city  property.  The  record  covers  two  pages, 
the  second  page  shown  in  the  figure  heing  opposite  the  first.  The  same  is 
true  of  the  record   of  taxes  on  out-of-town    property,  the   two   pages  of 

.. Od(r^TH-  1^0^ 


{jJ^S.  (MjkM 


hur^^ 


..  -x^  3i,M:^.p^4.i. 


cp-^- 


_2ILIitl2L 


''hiVLt.fti 


Fifi.  73.     IxsiRAStK  Thki.kr. 

which  are  shown  in  Figure  76'.  Figure  77  sliows  a  form  for  record  of 
taxes  on  personal  property,  and  Figure  78  a  form  for  the  record  of  water 
rents.  These  forms  should  all  be  used  under  one  cover,  either  perma- 
nently bound  or  in  loose-leaf  form. 

Trust  companies  doing  a  considerable  jirobate  business,  especially  if 
they  are  celled  upon  to  administer  large  estates,  find  it  desirable  to  keep 
a  Probate  Claim  Docket,  the  standard  form  of  which  is  shown  in  Figure 
79-    This  may  be  used  either  in  a  permanently  bound  book  or  in  a  loose- 


228 


TRUST  COMPANIES. 

City  Property. 


....^.».. 

.m„u:t.x 

TKUST 

PR0PEBn,NNAMEOP 

^i^S" 

,'•;-'. 

/^ro 

,.- 

CO 

v>W,.^^ 

■Jkn.^.r^xH^.^^.^ 

Fig.  75. — Tax-Book   (City  Prdperty),  Right-Hand  Page. 


City  Property. 


^77 

O-.g 

t:- 

F,voi 

S,^,o,„..„. 

S.-:' 

V»H*TI..N    1«», 

r^ 



Clt 

r„, 

1' 

L.od 

B.,id...-. 

T..I.I 

T., 

f 

Ax.".^.vi^,' 

1 

;af 

sv 

i?/<':K-^c2.v 

/<f3 

^ 

„, 

^ 

,^-:,- 

(• 

COO 

/7 

^T 

l)/ 1 

■T      ^ 

.      '^j   - 

Fig.  75. — Tax-Book   (City  Pbopeety),  Left-Hand  Page. 

Out  of  Town  Property. 


.„.„ 

v,',w°; 

?::;, 

.'*"" 

K.„. 

... 

t'.; 

"c," 

... 

S,,.,.. «..,.. 

.,.- 

,™. 

V.l.^on, 

-1 

r„. 

1. 

oh^ 

)»j^ 

«i 

/J.f 

^ 

^ 

^iO 

. 

Fig.    76. — Tax-Book    (Out-of-Towx    Property'),    Left-Hand    Page. 

Out  of  Town  Property. 


s...gu..„., 

«... ...... 

T„.S,- 

..„.„,..w. 

^^B^'' 

.<- 

Alc.^ 

a/..... 

i.<k.3:, 

o 

Fig.   76.— Tax-Book 

(Out-of-Town   Property),   Right-Hand  Page. 

Personals. 

~. 

B.T..SS,.K,..0. 

WHOLE  TJX 

.....EE 

XRUS. 

'Z" 

JsL-^,..fi:vii^wA. 

ncc 

^7 

<ro 

/^Sr.QO 

v^WLv^ 

?T 

^^.m.-^x<>...^^ 

s 

/■?.>; 

(P^'.c.^ 

Fig.  77. — Tax-Book  (Personal  Property). 

Water. 


0-... 

^r 

.»,„,..... 

A.o... 

...... .or 

'■it' 

Wh.«  P.,.bl. 

1 

TM-^ 

•Jia 

■is'i  Sir. 

'Jc.^.^^ 

^^ 

JU^^^sMJ...^ 

^1 

a^uo^f. 

i-y-s. 

Fig.  78.— Tax-Book   (Water  Taxes). 


FORMS  FOR  TRUST  DEPARTMENT. 


229 


leaf  binder.  This  form  provides  for  a  complete  list  of  all  claims  pre- 
sented against  each  estate,  with  all  necessary  details  regarding  each 
claim.  Attention  has  already  been  called,  in  Figure  6,  to  the  Probate 
Settlement  Docket,  also  used  by  some  companies. 

For  every  payment  made  by  a  trust  company  in  behalf  of  any  of  its 
trusts,  it  is  of  course  imperative  that  a  voucher  be  obtained.  In  the 
handling  of  many  trusts,  such  as  that  of  executor,  a  voucher  for  every 
item  of  expenditure  must  be  filed  with  the  court  at  the  times  when  re- 
ports are  submitted  to  the  court.  Because  of  this  fact,  some  companies 
deem  it  advisable  to  obtain  for  each  expenditure  two  vouchers,  one  marked 
"original"  and  the  other  "duplicate;"  the  former  is  to  be  filed  with  the 
court,  and  the  latter  to  be  retained  by  the  company. 

PROBATE  CLAIM  DOCKET. 


ProMt  Court  Mo.,:.::''.':  ''IJhtt  of  Letttrt^  it^.^  .'  .  '  "Li_  f  f»<rt«  »/.  ^  •_.  rr  >_ 

'  V  vV 

./ 

^ 

rmwmt 

....„.,.,.^ 

„n,.„.„^. 

._. 

.=. 

% 

•.:=? 

=r 

~ 

- 

;  -- 

ry 

-f 

^„ 

u    n  X. rtiiu- 

■>..,-,■..'      .^..v 

, 

'*i 

iteti     »f'^W^T^-JU^ 

i1 

ft 

f 

o 

ai....^  . 

,<P 

,. 

^ 

TJ 

. 

Fig.  79. — Pbobate  Claim    Dockkt. 


Figure  80  sliows  a  common  form  of  voucher.  Before  payment  of  the 
bill  described,  the  voucher  is  marked  "correct"  by  the  bookkeeper,  and 
"approved  for  payment"  by  the  Trust  Officer.     The  size  of  this  voucher 


THl'HT    nKl'AKT.MKNT 
THE  UNION   TKUST  COMIVV.NY 


.  2,X  tjO^CN-.  . 


^  loll^. 

.v^"'M .  "U  idi.....  i.                                    O'cti:,^-^  ;-»'v . 

►•••' 

l^^^i-ji,    ^jl*,      .jy.r^U.^U     y    La/C                                         -v^ 

i~)  tr  <■• 

S^ 

H 

t.« 

i 

-7 

u 

^'i 

: 

- 

rw  o>'  TUB  UNION  TKUHT  OUMPANlkaK  PITTBBURaU 


Fio.  80.— VorcHEH, 


2S0 


TRUST  COMPANIES. 


is  81/^  by  7  inches.  It  is  intended  to  be  folded  once,  crosswise,  so  that 
when  filed  away  the  information  given  on  the  back,  shown  in  Figure  81, 
may  be  easily  read.  The  vouchers  for  each  trust  are  numbered  con- 
secutively as  issued.  For  keeping  track  of  the  proper  numbers  to  be  given 
to  vouchers  as  issued,  a  convenient  device  is  to  have  on  large  card-boards, 
or  pasted  on  the  covers  of  the  deportment  check-book,  a  list  of  the  dif- 
ferent trusts  in  alphabetical  order,  the  name  of  each  trust  being  followed 
by  a  list  of  numbers  succeeding  those  of  the  current  voucher  numbers. 


TRUST    DEPARTMEaST 
THE  UNION   TRUST  CXJ(>1PANV 


VoR  .,_(i^x.^/vaAJ~ ^ ,....., 

,i,-a»,KNo.  Ja,H^. , - 


CPr 


nC-^t^l^ 


_  VsTOOO 


::.i:t::::: 


I'lG.  81. —  Back  of  Voucher. 


As  each  number  is  issued,  the  number  given  it  is  scratched  off  the  list  of 
numbers ;  so  that  the  correct  number  for  the  next  voucher  issued  is  readily 
seen  without  the  trouble  of  referring  to  the  journal  of  the  trust  con- 
cerned. 

This  department  usually  keeps  its  uninvested  funds  on  deposit  with 
the  banking  department  of  the  company,  (or  sometimes  with  another 
company),  and  makes  all  payments  by  check;  and  the  memorandum 
"Check  No.  "  in  Figure  81  refers  to  the  number  of  such  a  check.' 


FORMS  rOR  TRUST  DEPARTMENT. 


281 


A  customary  form  for  the  department  check  is  shown  in  Figure  82.  The 
bookkeeper  gets  the  debit  items  for  entry  in  the  books  of  this  depart- 
ment from  the  stubs  of  this  check-book.  He  obtains  the  credit  items 
from  credit  slips,  one  form  of  which  is  shown  in  Figure  83. 

Statements   of  accounts   required  by  tlie  courts  are  usually  made  on 
ordinary  journal-ruled  statiment  paper,  the  entries  being  made  in  chro- 


.^^iv. 


R,X7SX  A.OOOX7NT; 


.y.lixrx!fx^.i^)or^J^^  . 


Fu;.  82.     TiiisT  Dki'aht.mknt  Ciikck. 


CREDIT  INCOME  ACCOINT. 

/  ^^!^te  of^;^^^?t^^^  

Interest  o^:-^:^^."^-"'^^. 


/5-v 


Date 


"/a^ 


Fu;.  S;}. — Credit  Slip. 


nological  order,  items  for  principal  account  not  being  sejkarated  from 
those  for  income  account.  In  monthly  or  annual  statements  to  bene- 
ficiaries or  to  the  makers  of  trusts,  however,  the  items  on  the  two  accounts 
should  be  shown  separately.  Figures  8  !•.  85  and  86  show  different  forms 
for  statements  to  beneHciaries,  designed,  as  will  be  seen,  to  show  sepa- 
rately the  items  in  principal  and  income  accounts.  That  shown  in  Figure 
86  is   arranged   for  use   in   connection   with   the   individual    trust   journal 


232  TRUST   COMPANIES. 

shown  in  Figure  1  i.  The  statement,  it  will  be  noted,  is  practically  a 
copy  of  the  journal;  and  the  stenographer  simply  copies  the  entries  from 
the  journal  without  intermediate  copying  by  the  bookkeeper. 

It  is  a  growing  custom  for  individuals  to  deposit  their  wills  with 
trust  companies,  especially  in  cases  where  the  trust  company  is  made 
executor.  In  receiving  Wills  the  trust  company  undertakes  to  safely  keep 
same  and  to  deposit  them  with  the  proper  authorities  as  soon  as  possible 
after  the  decease  of  the  testator.  Figure  87  shows  a  form  for  the 
Record  of  Wills  on  File.  This  is  a  card  form,  the  cards  being  kept  in  a 
case  in  the  vault,  and  being  arranged  in  alphabetical  order. 

The  National  Safe  Deposit,  Savings  and  Trust  Company  of  tt»  District  of  Columbia 
TRUST   DEPARTMENT 


Fig,  84. — Statejient  to  Beneficiaries. 


"<:!iUj-..T.ust  CourA<r,2,^ 'ioJyc^^-Si^UUj^^J^'  i<^.'jL}iL 


Statem?nt  of  Receipts  and  Disbursements  of  money  in  al»ve 
Dr. 


Statement  i 

Trust  fruin        K>%n; 


l>ho. 


to^. 


±1 


Mjt 


^^2lZ^Z! 


^^'■'^->^"n,:^ 


jUiAlLlAa^J^J:- 


Fio.   85. — Statement   to   Beneficiaries. 


STATEMENT    OF    ACCOUNT. 

THE  CLEVELAND  TRUST  COMPANY.  Trusiee,far    t:io  totetc  of  iiipm  ti.  iioi 


THE  CLEVELAND  TRUST  COMPANY. 


I  113  Trclfth  St.,   tlov., 

1294  Third  Ave.,     " 
iiclrs  01)  213   nrlfth  S'., 
Ill  full  for  Troy  proiierty. 


P.  Plui.ir.er,  repair 


Fig.  86. — Statement  to  Beneficiaries. 


FORMS  FOR  TRUST  DEPARTMENT. 


2SS 


In  the  above  pages  the  writer  has  attempted  to  give  the  principal 
kinds  of  records  and  forms  used  by  the  average  trust  company  to  record 
the  history  of  its  business  in  the  trust  department.  There  are  of  course 
companies  undertaking  special  lines  of  work  which  call  for  varieties  of 
forms  not  included  in  the  above  sketch ;  and  besides  forms  for  such  special 
lines  of  work,  the  individual  preferences  of  the  officers  in  different  com- 
panies add  many  forms  of  greater  or  less  utility  which  from  the  nature 
of  the  case  it  would  be  neither  possible  nor  useful  to  attempt  to  include 
here.  There  is  also  a  class  of  forms,  legal  or  semi-legal  in  character, 
which   the   trust   company    uses   constantly    in    its   trust    department,   but 


Name 


3.it^M^ "A 


WllL             i! 

TEMPORARILY    SURRENDERED 

"/"oT      ''           7^0' 

TO  WHOM 

wi^  Yy[a^^ 

a 

-iiWf^^,   l^OAUz^y^^T^ 

^\    ! 

J                                  ->>g--Tv. 

1 

1                                         • 

1    i 

_ 

1 

Fig.  87. — Record  ok  Wii.i^  os   File. 


which  it  has  not  seemed  best  to  discuss  in  the  present  articles.  These  in- 
clude forms  of  bonds,  stock  certificates,  voting  trust  certificates,  cer- 
tificates of  participation  and  so  forth.  The  exact  form  of  such  documents 
depends  in  the  first  instance  upon  the  particular  contract  involved,  and  in 
the  second  instance  upon  the  individual  views  and  preferences  of  the 
lawyer  or  lawyers  who  prepare  them.  And  while  there  is  of  course  a 
general  similarity  in  tlie  forms  used,  tlie  considerations  just  named  result 
in  such  differences  in  details  in  documents  of  this  character  that  it  would 
be  difficult  to  fix  upon  what  could  be  called  standard  forms. 


CHAPTER    nil. 

FORMS  AND  RECORDS  FOR  THE  SAFE  DEPOSIT  DEPART- 
MENT. 

THE  necessary  forms  and  records  for  the  safe  deposit  department 
are  comparatively  few  in  number.  The  business  of  the  department 
involves  the  renting  of  individual  safes  or  boxes,  and  the  caring 
for  packages  left  for  safe-keeping.  In  theory,  the  business  is  sim- 
ple; but  experience  demonstrates  that  complicated  situations  are  apt  to 
arise;  and  it  is  important  that  the  few  forms  needed  should  be  prepared 
with  care,  and  those  affecting  the  contract  into  which  the  company  enters 
should  be  approved  by  competent  counsel.  The  Trust  Company  Section 
of  the  American  Bankers'  Association  in  1904,  and  again  in  1905,  appoint- 
ed a  special  committee  to  report  on  various  matters  affecting  the  safe  de- 
posit department,  and  including  a  compilation  of  forms.  The  reports  of 
the  two  committees,  bound  under  one  cover,  have  been  issued  by  the  asso- 
ciation, and  contain  valuable  information.  The  forms  there  given,  thirty 
in  number,  provide  for  the  needs  of  the  largest  companies,  but  of  course 
include  many  that  are  not  needed  by  the  safe  deposit  department  of  the 
average  trust  company.  A  few  of  these  forms,  together  with  others  col- 
lected from  different  sources,  are  given  here. 

The  identity  of  prospective  customers  of  this  department  should  be 
established  with  care.  When  the  applicant  is  an  entire  stranger,  some 
companies  send  to  persons  named  as  references  a  printed  letter  reading 
as  follows: 

Dear  Sir: — 

Mr.  of ,  whose  signature  is  attached, 

has  mentioned  you  as  a  reference.     If  you  consider as  an  honest 

and  reliable  person,  will  you  kindly  affix  your  signature  and  return  to  us 
at  your  earliest  convenience  ?  It  is  understood  and  agreed  by  us  that  this 
will  in  no  way  make  you  liable  for  any  damages. 

Yours  very  truly. 


Manager. 
Sign  here  — ■ 

Signature  of 


Whatever  the  method  used  for  the  purpose,  the  company  should  sat- 
isfy itself  that  every  applicant  for  a  box  in  the  vaults  is  the  person  he 
claims  to  be.  Should  he  rent  a  box  under  an  assumed  name,  in  case  of  his 
death  the  company  might  be  put  to  considerable  expense  and  certainly 
would  be  put  to  some  trouble,  in  determining  to  whom  the  box  should  be 
surrendered.    It  is  also  important  that  the  customers  of  this  department — 


FORMS  FOR  SAFK  DKPOSIT  DKPARTM  KNT. 


235 


as  of  all  departments,  for  that  matter — be  known  to  be  persons  of  ordi- 
nary honesty;  for  while  every  precaution  is  taken  to  conduct  the  business 
with  care,  the  possible  presence  in  the  vaults  of  a  designing  and  dishonest 
person  involves  too  much  risk  for  the  company. 

Assuming  a  prospective  customer  of  this  department  to  have  been  iden- 
tified as  a  proper  person  to  become  a  renter  of  a  box  in  the  company's 
vaults,  the  first  forms  needed  are  the  receipts  mutually  given  by  the  com- 
pany and  by  the  renter.  The  company  gives  a  receipt  for  the  payment 
of  the  rent  of  the  box,  a  form  of  which  with  stub  is  shown  in  Figure  88. 
Upon  the  back  of  this  form  arc  printed  the  rules  and  regulations  of  the 
department,  which  the  renter,  by  the  acceptance  of  this  receipt  and  by 
the  terms  of  the  receipt  which  he  gives  to  the  company  (see  Figure  89), 
agrees  to  abide  by.  Some  companies  prefer  not  to  print  the  rules  and 
regulations  on  the  back  of  the  receipt,  but  simply  to  include  in  the  receipt 
«ome  such  words  as  these:  "Subject  to  the  rules  and  regulations  made  by 
this  company."  This  is  intended  to  include  not  only  the  present  rules 
and  regulations,  but  also  any  that  the  company  may  see  fit  to  make  in 
the  future. 


THE     BLA^l^     TRUST  COMPANY. 


,  ..  «..,.»  vro.  r..  i<r.»i  U....UT  r«.r  .cc  gm 
r..TtAi.  ».  TvTi.i.  LflJ  or  rm.  a»T«n. 


Ui  .lU.  .^  tW..IJIH  U»U..i;j^..  - 

Fio.  89. — Receu't  for  Safe  Rent. 


When  the  keys  are  turned  over  to  the  renter,  a  receipt  is  taken  from 
him,  in  which  he  acknowledges  the  receipt  of  the  keys  and  agrees  to  the 
rules  and  regulations  of  the  company.  His  signature  to  this  receipt  also 
serves  as  a  means  of  identification  in  the  future.  For  many  obvious  rea- 
sons, however,  this  should  not  be  relied  iipon  as  the  only  means  of  identi- 
fication ;  and  it  is  customary  to  record  other  information  for  this  purpose. 
Such  information  may  refer  to  personal  appearance — height,  complexion, 
color  of  hair  and  eyes  and  especially  any  visible  scars  or  marked  peculiari- 
ties. In  the  case  of  a  person  who  continues  to  be  a  customer  for  a  long 
term  of  years,  however,  such  information  may  become  a  source  of  con- 
fusion, because  one's  personal  apjiearance  may  change.  Of  more  value 
are  such  facts  as  the  date  and  place  of  birth,  father's  name  and  mother's 
maiden  name.  Many  companies  also  give  to  each  renter  a  password, 
although  such  passwords  are  rarely  used,  being  easily  forgotten,  and  of 
doubtful  utility.  Except  in  the  cases  of  those  who  rarely  visit  their  boxes, 
the  attendants  soon  become  familiar  with  the  customers,  so  that  resort  to 
special  means  of  identification  is  not  needed. 


236 


TRUST  COMPANIES. 


It  is  convenient  to  have  this  information  recorded  in  the  same  place 
as  the  signature  of  the  renter,  and  in  the  form  shown  in  Figure  89  a  card 
6  by  4  inches  in  size  is  used  for  the  receipt  from  the  renter  and  for  his 
description.  The  card  also  contains  the  business  address,  the  home  ad- 
dress, the  number  of  safe,  the  password,  the  date  when  rent  becomes  due, 
name  of  person  who  introduced  the  renter,  and  a  form  for  surrender  of 
the  safe  and  keys.  It  also  contains  the  signatures  of  the  deputies,  if  any. 
These  cards  are  filed  in  alphabetical  order,  and  thus  provide  an  index  of 
the  renters  of  safes. 


hereby  scknowledgy^to  nave  received  this' dey  from  THE 

CLEVELAND  TRUST  COMP>H</.  a  receipt  for  rent  of  a  safe  num- 


OO- 


I  two  key*  of  aaio  aafe. 


vj  A<y>vA.<it<L 


DESCRIPTION 


V    A^V.^^1 


375^0 


l:S:t)i5L 


the  vault  of  THE  CLEVELAND  TRUST  COM- 


P 


(A 


n 


f 


Fig.  89. — Receipt  and  Idextification  Card. 


Very  frequently  the  renter  wishes  to  appoint  some  person  or  persons 
to  be  his  deputy  or  deputies  to  have  access  to  his  box.  It  is  convenient 
to  have  such  appointments  on  the  same  card  as  the  signature  and  descrip- 
tion of  the  renter;  and  in  the  system  here  described  the  forms  for  the 
appointment  of  deputies,  shown  in  Figure  90,  are  printed  on  the  back  of 
the  card  whose  face  is  shown  in  Figure  89-  Some  companies  have  the 
appointment  of  deputies,  in  practically  the  same  wording  as  sho\vn  in  the 
figure,  on  a  separate  card  which -is  filed  alphabetically  after  the  card 
which  contains  the  renter's  signature.  Information  for  the  identification 
of  the  deputy  should  appear  on  the  card  which  contains  his  appointment* 


FORMS   roil  SAFE   DEPOSIT   DEPARTMENT. 


237 


Figure  91  shows  a  form  used  to  revoke  a  deputy-ship. 

Figure  92  shows  a  safe  deposit  register  in  book  form.  As  in  the  case 
of  the  card  register,  it  contains  on  each  sheet  the  signature  and  receipt 
of  the  renter,  his  identification,  appointment  of  deputy  and  final  receipt. 
The  book  may  be  either  permanently  bound  or  in  loose-leaf  form.  If 
permanently  bound,  a  separate  alphabetical  index  of  renters  will  be 
needed. 


:^ 


h«r«by  tOpOlnt 


Xi2Q^ 


^ 


to  f    Oi-M  ly.    d«emy  te  xav*  • 

TM£     CLt»rtA^O    TRUST    COMPAX 


thoHty  i(  pavobad 


MrM^ally   p^Mx 


.,A<r(^ 


^fc: 


Cl*v*i«>id. 
-•i«««»y  (ppolnt- 


TME   CLEVELAND   TRUST 

pewtp  thai would   I 

th^Hty  la  rovohtd  »y 


>  wnting  to  t»a  C0l» 


~  da  Duty  to  *i»vm  accoaa  to  i 


tanta  o^  Sa'a  No «ow   r«ntad   »y i«  t 

THE   CLEVELAND  T9UST  COMP»Nv.   at    a"  ti-^ta.  «tt> 

powar  thai would  »ava  i«  pa'<0'<aliy  p>«a«<<l.  u' 

Ihortty  la  ravohad  by in  wHiing  to  tKa  Co'npa'iy 


Fio.  90. — AppoiKTjrevT  of  Deputies. 

Where  two  or  more  persons  rent  a  safe  as  joint  tenants,  in  place  of  the 
form  shown  in  Figure  89  there  is  used  a  card  form  which  is  identical  with 
it  except  that  the  receipt  for  keys  reads  as  follows: 

"We  hereby   acknowledge   to   have   received   from   The   Blank   Trust 

Company  of  Buffalo,  New  York,  a  receipt  for  rent  of  safe  No.  ,  with 

rules  and  regulations  of  said  company.     Also keys  of  said  safe. 

And  it  is  hereby  understood  and  agreed  as  follows:  viz., — Either  of 
us  may  at. any  time  surrender  said  safe  without  the  presence  of  the  other. 
Either  of  us  shall  have  the  power  to  deputize,  in  writing,  any  third  party 
or  parties  to  have  access  to  the  said  safe,  and  the  signature  of  only  one  of 
us  shall  be  necessary  to  such  deputization.  And  any  such  deputy  or  depu- 
ties shall  also  have  full  power  to  surrender  said  safe  at  any  time.     The 


138 


TRUST  COMPANIES. 


authority  of  such  deputy  or  deputies  shall  continue  until  written  notice  to 
the  contrary  is  given  The  Blank  Trust  Company,  of  Buffalo,  New  York, 
by  the  one  signing  such  deputization.  And  the  survivor  of  us  shall  have 
all  the  powers  and  rights  in  respect  of  said  safe  that  both,  or  either  of  us, 
can  exercise  during  our  joint  lives." 

A  shorter  form,  used  for  the  same  purpose,  reads  as  follows : 
"We,  the  undersigned,  agree  to  the  rules  and  regulations  of  the  Sec- 
tion Safe  Deposit  Company,  in  force  at  this  date,  and  such  reasonable 
rules  and  regulations  as  may  be  hereafter  adopted.    And  we  agree  to  hire 


Jl::<:^...y^. .^. 190  ^ 

Section  Safekyeposit  Co. 


(City)  (State) 


Sirs- 


Please  take  notice  that  from  and  after  this 
date  li/:^.S.^...^.<t:^-^. 


who  IS  my  deputy  on  Safe  No /..7-.>^ir:. in  the 

Vaults  of  your  Company,  rented  by  me,  ts  no 
longer  authorized  to  have  access  to  said  Safe. 

Yours  respectfully,  . 

This  revocation  will  not  be  considered  operative  by 
the  Company  until  acknowledged  in  writing  as  recetved 
"by  them 


Fig.  91.— Form  for  Revoking  Deputyship. 

and  hold  safe  number as  joint  tenants,  the  survivor  or  survivors  ta 

have  access  thereto  in  case  of  death  of  either,  but  either  has  the  power  to 
appoint  a  deputy.  Either  of  the  tenants  has  the  right  to  surrender  the 
safe." 

Where  the  safe  is  rented  by  a  corporation,  the  same  form  of  receipt 
as  that  given  by  individuals  may  be  used,  but  it  becomes  necessary  to 
have,  in  addition  to  the  receipt,  an  appointment  of  the  party  or  parties 
who  are  to  represent  the  corporation  in  access  to  the  safe.  For  this  pur- 
pose a  certified  copy  of  the  resolution  of  the  corporation  is  desirable,  and: 
the  following  is  a  form  used : 


FORMS   FOR  SAFE   DEPOSIT   DEPARTMENT.  239 

Safe  Deposit  Register 


2ai^^       V-S 


y^v.   'I,'cs    v..    ■:,  <■■<■        ;^'l 


Namb  or  RDrrai^ 


<U-rl^l?cL,d  y 


SKWATUte  AND  RECEIPT  OF  RE.HTEK. 


kt^j^Cy      L?t\ 


Placs  or  BttiMKii 

1     ^ -'!-.{    -^-^ 


Omci  Add>m 


.^_^ 


-Urr.     -n-^^,,    3,    fvU- 


J^-.t;.(^^.:  ,  ^>^/tl 


..f^    ?.■>-(  -^«U.,/>^  .^.^ 


..J.    -i    -y  '  -■-'  '  ■-      r-  i^^- 


j^sL 


^  Samk  or  DiKTTv 


APPOWT.HENT  OF  OBVTY. 


iM-^±i 


KJUIDIKCR    , 


droolu   to  bare  •««•  lo u4  coslrel  a<  (W 


al  (bOTC  nl»  la  lk<  naU  cir 


^;u     OiU-.^^v^.^l     ^J 


oolil  ihU  •albonly  i*  mokrd  i 


'Vr^'-/0/^L^ 


■f^ 


Post  Officr  Apdur 


-4^ 


01    0!<     0-^ 


n 


^E. 


RlFkHtNCU 


/iitrT^.  4fM>A  u^Li'  V  r^i 


FinAi.  Ritiirr 


I  bnrby  Mftilr  Ibal  ill  iIm  papm  m4  olkcr  p 


Fig.  92. — Safe   Deposit  Register,  is*   Book   Form. 


"To  the  Section  Safe  Deposit  Company : 

At  a  meeting  of  the  board  of  directors  of  the  Ham  and  Sandwich 
Company,      held      at      its      office      on      the      9th      day      of      February, 

1906,  the  following  resolution  was  adopted:     'Resolved,  That 

shall  have  the  right  of  access  to  the  safe  (No.  )  in  the  vaults  of  the 

Section  Safe  Deposit  Company,  standing  in  the  name  of  this  company.' 

(Signed) 


(Seal) 


Received, 


Secretary 
-190     '■ 


President. 


240 


TRUST  COMPANIES. 


This  resolution  may  name  certain  individaials  in  person,  or  it  may  name 
the  officer  or  officers  of  the  corporation  who  are  to  have  access  to  the  safe. 
In  the  latter  case,  there  will  also  be  needed  a  certified  list  of  the  officers 
of  such  corporation,  which  list  must  be  refiled  as  often  as  the  corporation 
holds  an  election. 

For  the  record  of  cash  transactions  the  only  forms  necessary  are  a 
Cash  Book  for  receipts  only  (no  cash  being  paid  out  in  this  department, 
except  for  occasional  rebates),  and  cards,  or  books  if  preferred,  for  the 
ledger  accounts  of  renters.  Figure  93  shows  a  form  of  Cash  Book.  At 
the  close  of  the  day's  business  (or,  in  practice,  at  the  beginning  of  the 
next  day)  the  cash  received  during  the  day  is  deposited  in  the  banking 
department  to  the  credit  of  this  department;  the  amount  of  such  deposit 
being  shown  in  the  column  headed  "Amount  Deposited." 

For  the  ledger  accounts  with  customers  of  this  department  card  led- 
gers are  generally  used.    A  form  of  such  a  card  ledger  is  shown  in  Figure 

301 

RECORD  OF  RECEIPTS-SAFE  DEPOSIT  DEPARTME^^•. 


T^^ 

.... 

«1?A\s 

3.0... 

«,H0,. 

p 

DUE 

««.„ 

'> 

&jy'£^l,j ' 

/a 

V 

/ 

/^ 

S^^y  ^^'^'^^  ^ 

^• 

. 

X. 

^ 

^^ji      y2y      —f              ^ 

^j 

4„ 

^ 

S!^i^7^^M.^Ji,^^ 

u 

fr: 

Z^v^. 

i.. 

,;? 

- 

/ 

^ 

,an^ 

b 

^ 

3o 

J 

^ 

-i^ 

^c. 

^i 

'■21 

- 

Fig.  93. — Safe  Deposit  Department  Cash  Book. 


94.  The  size  of  the  card  is  6  by  4  inches.  The  record  is  con- 
tinued, if  necessary,  on  the  back  of  the  card,  which  is  ruled  in  the  same 
way.  These  cards  are  filed  in  a  case  according  to  due  dates  of  rent,  and 
thus  constitute  the  tickler  of  the  department.  Instead  of  this  plan,  how- 
ever, some  companies  have  the  cards  prepared  with  a  tab  at  the  top  of 
each  upon  which  is  printed  the  name  of  the  month  during  which  the  rent 
expires.  The  tab  for  the  January  cards  is  at  the  left  upper  corner  of  the 
card,  and  that  on  the  December  card  is  at  the  right  upper  corner.  The 
tabs  on  the  cards  for  the  intermediate  months  are  arranged  in  order  be- 
tween these,  so  that  when  the  case  is  filled  with  cards  the  eye  may  by 
glancing  at  the  tops  of  the  cards  pick  out  those  containing  expirations 
for  any  given  month.  A  sample  of  this  card  for  the  month  of  February 
is  shown  in  Figure  ^5.  Under  this  plan  the  cards  are  arranged  in  the 
numerical  order  of  the  safe  numbers ;  and  the  tabs  at  the  tops  of  the  cards 


FORMS  FOR  SAFE  DKPOSIT  DFFARTMKNT. 


211 


serve  as  ticklers.  Towards  the  last  of  each  month  the  cards  for  the  fol- 
lowing month  are  looked  over,  bills  for  renewal  are  made  out,  and  the 
cards  replaced.  The  bills  are  made  out  in  duplicate,  one  copy  being 
mailed  to  the  renter,  while  one  is  kept  by  the  teller  who  receives  rent  pay- 
ments, serving  as  his  memorandum  of  rents  due. 


AOOMKSS. 


M 


a^  sr^i^j^ 


-n. 


■  >«».oo    llJT 


e>Tc 

ofiiT     1 

^^ 

r^ 

^-;:^~ — 1 

r^ 

•  CBIT 

cat*iT 

••tc 

■  !■••*• 

'/l|o. 

vS 

^5 

^C 

'/.-:, 

1 

1 
1 

r^ 

L^ 

1 

s  ^ 

1 

I 

^^.^ 

......       ..-^.. 

Fig.  94. — Li:d(;kh  Cahi). 


^k'S\ 

NAME   <^^^    (a^.    t/KvA/V<U>>.^                  SAFf   NO      / -3                    EXP.HATION  ^1^ 
AOORESS       /66      ^^tt^^.                  P..TA.    /0.<^                .     •„...«     /JV 
RFMARKS                                                                                                       wnTir.F 

OAT, 

oiaiT 

CXtOlT 

OATt 

TO 

'M^ 

1 

05^ 

/O 

fV 

/r 

(■O 

:\L 

7 

<^.<: 

V.'.f 

^ 

THE  ClV 

IZENS  aAVIMCS  AND  TRUST  COMPANY                 ,.^.       ,.  , -, 

Fio.  95. — Card  Leix-.eh,  with  Tab. 


242 


TRUST   COMPANIES. 


Some  companies  prefer  to  have  the  department  tickler  in  book  form, 
as  shown  in  Figure  9(3-     This  book  is  indexed  by  years  and  months. 

It  is  desirable  to  have  a  record  showing  the  history  of  each  safe,  and 
for  this  purpose  the  Safe  Register,  shown  in  Figure  97,  is  used.     As  will 


SAFE    RENTAL    EXPIRES. 


i^.L 


C^.li.c.  i 

..„ 

N.„, 

Addim 

«■ 

"." 

.„0«„, 

Wbfn  F.,d 

P.„.. 

rw 

, 

o6 

■U.b.S^^u^ 

?l  .\,^-H^^/ 

^-T 

^^ 

?^C 

T 

1 

A  A     dnw^rrrs-,. 

:ii  1  '^lOTvnn-- 

3l  X 

/:> 

/O 

/f 

1 

-^^  ^..^Jr' 

i\H-     O^L'L^..^' 

10 

-^ 

% 

lu.£R.«?W^v 

ni  Q..^tfU 

Ml 

/<. 

^ 

2 

0.  a.  0;^^^ 

tHi  &i<Jfxz^;:tt' 

■^■W 

:^o 

3 

Fig.  96.— Tickler  Page. 

SAFE    REGISTER 


D... 

N,. 

Pme 

N.„. 

A..,». 

Rnnukj 

1i^r^ 

^ 

1 

H 

wr^.  S....rl 

/f(^7  o^a  Sf, 

ar^' 

03- 

.5 

<;.  U)  4-0^/2:4,^ 

/X37    Idjr^TTrx-il.f- 

iU,^a/UW  4r^*-lli 

o     O 

Ul 

^ 

2 

^,S 

A.S.  cJ5^,^c/l 

74  U-tiaU, 

\''. 

of 

/Ml  4%jiiU..  vSf-. 

vr, 

vV 

^■xi^vi^  C^I<rv 

W<.^.^L^<^'4^ 

3 

Fig.  97. — Safe  Register. 


be  seen,  this  record  shows  at  any  time  what  safes  are  unrented,  and  who 
are  the  present  holders  of  rented  safes,  as  well  as  who  was  the  renter  of 
any  given  safe  at  any  given  date. 

Figure  98  shows  a  card  form  for  this  same  record.     These  cards  are 
filed  in  cases  having  index  cards  for  every  ten  numbers.     The  tab  at  the 


FORMS  rOR  SAFE  DKPOSFr  DFRAHTMFNT. 


243 


top  of  the  card  shows  the  last  figure  of  the  number,  so  that  the  card  may 
be  easily  picked  out  after  the  index  card  is  located.  Thus,  the  card  shown 
in  the  figure  would  be  tlie  fifth  card  filed  after  the  index  card  970.  In 
addition  to  the  information  called  for  in  the  form  shown  in  Figure  97,  it 
provides.for  the  record  of  the  number  of  the  lock  on  the  safe,  and  the  date 
when  the  lock  was  changed.  Tliis  last  memorandum  has  r«-fi-r«-nce  to 
the  practice  of  the  most  careful  companies,  of  changing  the  look  to  a 
safe  every  time  the  renter  is  changed,  so  that  in  case  duplicates  of  the 
keys  have  been  made,  they  will  be  useless  as  a  means  of  gaining  access 
to  the  safe.  This  is  an  example  of  the  extreme  care  taken  to  provide 
against  any  possible  contingency  that  might  occasion  loss  to  a  customer 
through  negligence  on  the  part  of  the  company. 


SAFE  NUMBE 

^97'f 

RENTAL  PER  ANNUM.     .-5  ' - 

..«T,0 

•!<««• 

cJS,. 

.»-.«,«. 

'^9-p/Oi 

Cl b-rc^-ii^x^.  d\  .6^ ^:jJ- 

374 

«^/^/o  3 

^:>n/0i 

HI'I  JQi 

(v^i((coo^.  Oy.  i^^->..jxtr 

n-m 

'o/tojo^ 

"Hnlo^ 

'hsjos 

dh.S.     ^U,L-^U-7t 

H^ 

r    ^ 

S  c  - 

l-"io.  98.     Sakk  Hkoistkh,  in   ("akd   I-Khm. 

Most  companies  keep  a  Visitors'  Register,  a  form  of  which  is  shown 
in  Figure  99.  In  this  book  the  attendants  make  record  of  every  visit  that 
is  made  to  the  safe  deposit  vaults  by  customers  or  by  employees  or  officers 
having  safes.  The  Mord  "Room"  at  the  top  of  the  last  column  refers  to 
the  coupon  room  to  which  the  visitor  retires  with  his  box.  The  usefulness  of 
this  memorandum  lies  in  the  fact  that  customers  frequently  are  so  careless 
as  to  leave  articles  of  value  in  the  coupon  room  when  they  replace  their 
boxes  in  the  vault.  Before  another  person  is  admitted  to  the  coupon  room, 
the  attendant  examines  it  for  any  articles  that  may  have  been  left;  and 
if  he  finds  any,  the  Visitors'  Register  shows  to  whom  they  belong.  It 
will  be  seen  that  from  this  record  the  comjiany  can  learn  just  what  visits 
have  been  made  to  any  given  safe,  by  whom  they  were  made,  and  the 
other  particulars  shown  in  the  figure.  This  information  is  frequently  of 
great  value. 


244 


TRUST  COMPANIES. 


VISITORS'  REGISTER— SAFE  DEPOSIT  DEPARTMENT. 


30i 


b}llh.-^..  S^:tl 


'^:o3 


9.0S 


Silk. 


J£± 


^Hg^VWUC/ 


.3101L 


Am 


LOiiI.^.,.<^.(^r^ 


22I2J. 


lo:zS- 


X02 


V      >g>-^/TA^ 


fo:-sr^ 


Af-/Sr 


Fig.  99. — Visitoks'  Register. 

Some  companies  have  the  bookkeeping  for  this  department  dene  in 
the  department,  while  others,  especially  the  larger  ones,  have  the  records 
involving  cash  kept  in  another  department.  If  the  latter  plan  is  followed, 
it  is  necessary  to  have  a  set  of  debit,  credit  and  memorandum  slips  for 
bookkeeping  information.  These  include  rental  tickets,  giving  full  infor- 
mation when  a  safe  is  rented,  surrender  tickets,  for  use  when  a  safe  is 
surrendered,  credit  slips  for  payments,  etc.  The  exact  forms  of  these 
tickets  will  depend  upon  the  particular  system  of  the  company  using 
them.    This  department  also  needs  other  simple  forms,  such  as  bill-heads. 

The  Storage  Department. 

As  already  stated,  in  addition  to  the  renting  of  safes,  this  department 
undertakes  the  storage  of  articles  in  separate  packages,  varying  from 
envelopes  containing  an  insurance  policy  to  trunks  or  chests  containing 
silverware,  books  or  other  bulky  valuables.  This  business  is  simpler  than 
that  of  renting  safes,  involves  fewer  forms,  and  necessitates  fewer  precau- 
tions, the  responsibility  of  the  company  being  well-defined.    The  customer 


!^€k..-^.^  <D 


,<r^A''=S- 


THE    BUAMK     TRUST    COMPANY 


CERTIFICATE  OF  DEPOSIT 


PACKtCE  Nn/r   ■ 


lYMEKI  Of  ANT  CHAKOBS. 

or  TmperaiT  on  ahy  paxt  ■naaat  and  a 


Fig.  100. — Certificate  of  Deposit,  With  Stub. 


FORMS   FOR   SAFE   OFPOSFI"   HKPARTMtLNT. 


245 


Tiiw    /^-y^ 


^/:^    ■»;? 


iAS 


THE    3LPv  N  K     TRUST  COMPANY 


Fi(i.   101.     Hknewai.  Uecki 


^. 


Cm*<«nd,  O.^ 


D^iJ^m^ 


TRUST  COMPANV  •  CtrtMcat*  of   QipoaH  • 


»m  THE  Cltvl  LAND 


(^n^v^  \^yi^;.j^^>x 


....    C^p>^  /,/^o>C 


d«pu<i^    "  "•'^  acedM  to  •»<    e 

CLEV£L»HO  TRUST  ^^ANV   at  I 

pr«s«nl,  uttll   this  awtho^My  ta   rv 
wHtInf   to   tha   Company 


vawX   of    TM( 


^/OtSCBIPTlOW 


/tT^y//    \J43yT/T.C;>U>K 


lilt 


«4^ 
#1 


S  S  S  !  S 


2  r  s 


( 

Clavaland. 
hafaoyaeli" 

>-••«••«"« 

varao 

.Wi*»ro-.TM»Clly«LAJo 

TRUST  OOVPANT  t» 

a  aaoM  ••• 

«r<M« 

•apoaN.  I"  ■««•  •«•».  a«« 

•..va  .urranaara*  t. 

-„  Ca.«flM»  IM. 

co.a«n,  th.  sama. 

Fig.  10^.— Hkntchs  Hkceipt  for  Cehtificate  of  Dcposrr,  Ktc 

is  given  a  receipt,  which  is  sometimes  called  a  Certificate  of  Deposit,  and 
sometimes  a  Storage  Receipt,  a  form  of  which  is  shown  in  Figure  100. 
The  back  of  this  receipt  contains  the  printed  conditions  and  regulations 
of  the  company  governing  storage  of  valuables,  and  a  receipt  to  be  signed 
when  the  package  is  taken  and  the  certificate  of  deposit  surrendered. 
These  Conditions  and  Regulations  read  as  follows : 


246 


TRUST  COMPANIES. 


DATE  OF 
ACCESS  TO 
PACKAGE    8V 
DEPOSITOR 


REMOVED  AND 
CERTIFICATE 
SURRENDERED 
BY  DEPOSITOR 


%SJo^ 


OS 


AND   CERTIFI- 
CATE RE 
CEIVEO  By 
DEPOSITOR 


'H 


or 


^ 


(7fe^rTrur>v/ 


X 


% 


Uv'9  6  i^iy^<\^J 


-rv'%.A_e.^ 


\J^-f-0~ijL/>^^ 


''CL^^yy^xJiA, 


^-J^in^'XAj-* 


\J^ 


Fig.  103.— Package  Record. 

1.  It  is  agreed  by  the  depositor  that  no  money,  certificates  of  stock, 
registered  or  coupon  bonds  or  other  negotiable  securities  are  contained  in 
this  deposit. 

2.  In  case  of  loss  of  deposit  through  its  fault  or  negligence,  the 
option  is  reserved  to  the  company  of  either  paying  for  it,  at  the  valuation 
specified  by  the  depositor,  or  of  replacing  it  in  kind  or  amount. 

3.  This  certificate  is  not  transferable  except  by  assignment  endorsed 
hereon  and  approved  by  the  company. 

4.  If  the  whole  or  any  part  of  this  deposit  shall  be  withrawn  before 
the  expiration  of  the  specified  period,  no  portion  of  the  charge  shall  be 
returned,  and  if  continued  longer,  it  shall  be  deemed  a  renewal  of  the 
deposit  on  the  same  terms,  for  which  a  like  rate  shall  be  chargeable. 

5.  This  certificate  must  be  presented  upon  the  withdrawal  of  the 
deposit  or  any  part  thereof. 

These  receipts  are  bound  in  book  form,  and  are  numbered  consecu- 
tively. 

RENTALS,   REK2\V.\LS   AND   SURRENDERS 


' 


sL 

N.„, 

Addias                i 

I'i. 

... 

-»- 

"'" 

i- 

i'l 

n 

To.i,C«h 

.„.,.. 

^ 

lb 

111 

/0-.(Ja..^. 

^i^k-JU^d       . 

1^ 

, 

"f 

aUL^  (P^ 

ix,^aJi 

1^ 

fo 

!|3 

aw.(?.(2x^^ 

,x 

^ 

<r.-> 

vn 

^Lvi^„.H  Cvrr- 

nCL.M.a 

. 

St 

a:^  .-.-.c 

,^. 

^, 

J 

Fig.  104. — Rental,  Renewal  and  Surrender  Book. 


FORMS  FOR  SAFE  DEPOSIT  DEPARTMENT. 


247 


The  stub  of  this  receipt  should  contain  the  same  description  of  the 
package  as  that  given  in  the  body  of  the  receipt.  If  the  package  is  left 
for  a  longer  period  tlian  that  provided  for  in  the  certificate  of  deposit, 
upon  payment  of  the  rent  for  the  longer  storage,  a  renewal  receipt  is  given 
in  the  form  shown  in  Figure  101.  At  the  time  that  the  customer  receives 
his  certificate  of  deposit  of  the  package,  he  signs  a  receipt  for  same,  in 
the  form  shown  at  the  top  of  Figure  102.     This  form,  which  is  similar  to 


Dau-v  Repoht. 
HAFK  m-yowrr  depahtment. 


/?'L-..A,., 


rACKAocs  HI MiVio 


^.  'S^j^iA) 


'ftM^^Z 


rcy 


'rft^ 


SAFU  (UKUINMIIIO 


X..^^^Su..f/ 


.^^JjkL. 


lATtMINT  OF   ! 


I   ■•  ■    I 


IQ^  /^.l-' 


wmmi,    I      -k'^ 


jlL .>-^-^  ?-''.' 


/fO        ^.T 


:■  xiu-  '.'■• 


Fio.  105. — Daily  Report. 


that  used  for  the  receipt  for  keys  to  a  safe,  sliown  in  Figure  89,  also 
provides  for  the  appointment  of  a  deputy,  and  contains  places  for  the 
description  of  the  depositor  and  for  that  of  his  deputy,  and  other  informa- 
tion as  shown.  On  the  back  of  the  card — which  is  6  by  4  inches  in  size — 
provision  is  made  for  the  history  of  the  package  from  the  time  it  is  received 
by  the  company  until  it  is  finally  delivered.     (See  Figure  lOS.) 


248  TRUST   COMPANIES. 

The  ledger  card  for  the  record  of  cash  transactions  regarding  packages 
left  for  storage  is  practically  the  same  as  that  used  in  the  renting  of  safes, 
shown  in  Figure  94;  the  only  difference  being  that  the  words  "Package 
No. "  are  substituted  for  the  words  "Safe  No. ."  It  is  custom- 
ary, however,  to  have  the  two  sets  of  cards  of  different  colors. 

Some  companies  use  what  is  called  the  "Rental,  Renewal  and  Sur- 
render Book,"  a  form  of  which  is  shown  in  Figure  104.  This  is  intended 
to  give  a  running  account  of  the  business  done  by  the  department.  It 
shows  the  business  transacted  during  any  given  period,  and  provides  a 
means  of  comparing  the  growth  of  the  company  from  time  to  time. 

This  department  sends  to  the  general  bookkeeper  a  daily  report,  which, 
together  with  the  reports  from  all  of  the  other  departments,  is  placed  each 
morning  on  the  desk  of  the  President  or  the  executive  head  of  the  com- 
pany. This  report  shows  the  number  of  safes  rented  during  the  day,  the 
number  surrendered,  the  number  of  packages  received  and  the  number 
surrendered,  a  statement  of  the  number  of  visitors  to  the  vault  during  the 
day,  and  a  comparative  statement  of  the  number  of  safes  rented,  packages 
in  storage  and  current  earnings.  A  form  of  such  a  report,  adapted,  of 
course,  to  the  needs  of  the  company  which  uses  it,  is  shown  in  Figure  105. 
Monthly,  semi-annual  and  annual  statements  of  the  same  character  are 
also  prepared. 


CHAPTER   IX. 
FORMS  AND  RECORDS  FOR  THE  BANKING  DEPARTMENT. 

AS  has  already  been  stated,  the  business  of  the  banking  department 
of  a  trust  company  differs  little  from  that  of  an  ordinary  state 
bank,  with  the  exception  that  trust  companies  in  many  states  are 
forbidden  to  discount  commercial  paper.  As  a  consequence  many  of  the 
forms  and  records  used  by  state  banks,  and  also  some  of  those  used  by 
national  banks,  are  adapted  to  the  use  of  the  banking  department  of  the 
trust  company.  Such  forms  and  records  have  been  treated  at  length  in 
several  excellent  books  on  the  subject  and  in  current  periodicals;  so  that 
in  treating  of  them  here  it  is  necessary  to  travel  over  a  fairly  well-beaten 
road.  However,  each  year  sees  introduced  into  our  banking  institutions 
new  forms  and  devices,  and  he  who  would  keep  abreast  of  the  times  must 
be  ever  watchful  for  the  latest  improvements.  The  up-to-date  systems 
of  bank  accounting  involve  many  time  and  labor-saving  plans,  some  of 
which  are  regarded  by  the  old-time  banker  as  sacrificing  safety  and  com- 
pleteness to  speed.  Loose-leaf  records,  card  systems  and  the  doing  away 
with  the  use  of  intermediate  journals  have  largely  supplanted  the  old 
systems  in  many  banks;  while  others  regard  these  innovations  with  sus- 
picion if  not  with  open  hostility.  Experience,  however,  seems  not  to 
justify  the  fears  that  many  bankers  hold  regarding  new  methods. 

The  modern  trust  company  is  equipped  with  many  devices  which 
lighten  labor,  save  time  and  insure  greater  accuracy  and  neatness. 
Prominent  among  these  are  the  typewriter  and  the  adding-machine, 
without  which  the  enormous  amount  of  business  done  each  day  by  the 
large  institutions  would  be  difficult  if  not  impossible.  A  great  profusion 
of  other  time  and  labor-saving  devices  are  used, — rotary  letter-copying 
machines,  filing-cabinets,  manifolding  devices,  interest  tables,  coin-trays 
and  counters,  check-protectors,  rubber  stamps,  etc. 

While  there  is  a  general  similarity  in  the  forms  used  by  different 
companies  for  given  purposes,  slight  variations  from  standard  forms  are 
so  numerous  that  it  would  be  quite  impossible  in  such  a  sketch  as  this  to 
include  all  good  forms  that  are  in  use.  In  selecting  the  forms  to  be 
given  here,  as  in  selecting  those  already  given  for  other  departments,  the 
writer  does  not  intend  to  imply  that  other  forms  may  not  be  as  good. 
It  should,  perhaps,  also  be  remarked  that  throughout  this  work  the  writer 
has  usually  avoided  New  York  city  forms,  because  the  business  of  banks 
and  trust  companies  in  the  metropolis  is  in  some  respects  different  in  its 
requirements  from  that  of  those  located  in  the  smaller  cities  and  in  the 
towns  in  different  parts  of  the  country. 


250 


TRUST  COMPANIES. 


Pioneer  Trust  Company. 


'^Ilj0y^r^   UjCL^^yrK 


LL^T^ 


3/^^      :iS'^^.     ,^ 


CUBC.-^^ 


Tel.  Wo.   ^^^'U^.l^  ^^h^l 


i  (RU  MFO.  CO.,  ROCMfSTtR  AND  ClEVEIAMO 


Fig.  106. — Signature  Card. 


Forms  for  the  Use  of  Customers. 

When  a  new  customer  opens  an  account,  the  first  form  needed  is  the 
signature-card,  upon  which  he  writes  his  signature  to  be  used  by  the 
company  as  a  means  of  identifying  his  checks.  The  card,  a  form  of 
which  is  shown  in  Figure  106,  should  also  contain  his  address,  and  other 
information  as  shown  in  the  figure.  These  cards  are  filed  alphabetically 
in  cases  with  guide-cards  at  frequent  intervals ;  the  cases  being  placed  in 
such  a  position  as  to  be  easily  accessible  to  the  paying  tellers  and  to  the 
bookkeepers.  Some  companies  take  two  or  more  signatures  from  each 
customer,  so  that  the  signatures  may  be  filed  in  places  convenient  to  the 
different  workers  who  may  have  to  refer  to  them.     Formerly  signature 


PROCURE  SIGNATURE  OF 


Iaj-^c^. 


JLtrrv^^^JU 


'^Qsud: 


(^^^^-■^sU 


^  "f^J^   %oJA4-r^ 


S.<P. 


H  I       L^j-  n^  QjyS. 


^DAT^^//0/(96 


Fig.  107. — Dummy  Signature  Card. 


FORMS  FOR  BANKING  DEPARTMENT. 


S51 


books  were  used  instead  of  cards ;  but,  exc<i)t  in  very  small  coiupanics, 
the  advantages  of  the  cards  are  so  many  that  they  are  rajjidly  displacing 
books  for  this  purpose.  It  sometimes  happens  that  the  signature  of  the 
new  depositor  cannot  be  obtained  at  the  time  the  account  is  opened.  In 
such  case,  a  signature-card  is  sent  to  him  to  be  signed  and  returned  to 
the  company;  and  in  the  meantime  it  is  a  good  plan  to  have  a  dummy 
signature-card,  like  that  shown  in  Figure  107,  which  is  filed  in  the  proper 
place  with  the  regular  signaturt-cards  until  such  tinie  as  the  signature 
is  obtained.  The  use  of  this  card,  which  should  be  of  different  color  from 
that  of  the  signature-cards,  serves  as  a  constant  reminder  that  a  signature 
is  missing,  and  also  makes  the  signature  file  a  complete  index  of  accounts. 

UNION  TRUST  COMPANY 


&  6..6^^zt^ 


_--_OtM. 

.    10- 

.«^ 

PLBASB 

USTBiCBCn 

KX  SSPARATBtT. 

Il<f 

Cold 

ao 

..„ 

IL 

Cheeks 

-    ^1 

si-l  H 

/a 

IS- 
03 

^ 

<? 

i         2^i,0  7^ 

\ 

.        1' 

I 



r^, 

1 

Fio.  108.— Deposit  Slip. 


The  customer  is  next  providtd  with  a  i)ad  of  deposit  tickets,  one  of 
which  he  fills  out  for  his  first  dcjiosit,  with  help  from  the  new  account* 
teller  if  necessary.  A  customary  form  of  deposit-slip  is  shown  in  Figure 
108.  Figure  109  shows  another  form  providing  for  the  separate  listing 
of  checks  on  local  banks.  For  customers  whose  deposits  are  apt  to 
include  long  lists  of  checks,  larger  slips  in  much  the  same  form  an:  pro- 
vided, double  columns  for  amounts  often  Ixing  used. 

The  customer  is  next  given  a  pass-l>ook,  in  which  is  entered  his  name 
and  the  date  and  amount  of  the  first  deposit.  It  is  a  great  convenience 
to  have  the  customer's  name  written  on  the  front  cover  of  the  pass-book, 
and  this  is  usually  done.     The  pages  in  the  old-style  pass-book,  still  used 


252 


TRUST  COMPANIES. 


in  many  institutions,  particularly  in  the  East,  are  usually  ruled  as  shown 
in  Figure  110,  the  deposits  being  entered,  as  debits  to  the  trust  company, 
on  the  left-hand  page ;  and  the  checks  being  entered,  when  the  book  is  left 
to  be  balanced,  on  the  right-hand  page,  as  shown  in  the  figure.  It  is  now 
more  common,  however,  to  list  the  checks  on  an  adding-machine,  entering 
in  the  pass-book  only  the  total  of  the  checks,  and  subtracting  such  total 
from  the  footing  of  the  deposits  to  show  the  balance.  In  such  case  the 
pages  of  the  pass-book  are  not  regarded  as  debit  and  credit  pages;  the 
book  being  simply  a  record  of  deposits,  which  are  entered  on  either  the 
left-hand  or  right-hand  page  of  the  book  when  the  previous  page  is  filled, 
as  is  shown  in  Figure  111.  Rubber  stamps  are  used  to  insert  the  words 
"total  checks  paid"  and  "balance,"  and  the  lines,  when  the  book  i» 
balanced. 


DCPOStTCO  WITH 


The  Merchants'  Loan  &  Trust  Co. 


rau  j»ocon«T  of 

..L~..^..i^..:..^^M.!^J.:fS^.. 


Chiap.,. 

"M^^^r^JO^,,, 

90.4.. 

Currency, 

DO 

111 

CT». 

(Md, 

:lv 

Silver. 

V, 

LA 

£ 

~^ — ?^ 

.a^ 

^1. 

/...a. 

LA. 

ii.: 





fi 

03_ 

. 

Fig.  109.— Deposit  Slip. 


Several  different  sizes  of  pass-books  are  usually  kept  in  stock  ta 
accommodate  accounts  of  all  degrees  of  activity,  the  rulings  of  all  pass- 
books being  the  same,  following  either  the  form  shown  in  Figure  110  or 
that  shown  in  Figure  111.  Some  companies  provide  special  pass-books 
for  the  use  of  women  customers,  of  size  small  enough  (about  SI4  by  2^ 
inches)  to  be  carried  in  a  woman's  pocket-book. 


The 

American 
Trust 
Company 


t*i    ACCOUNT    Vj  i-r  H 


{J</y^jd.AJUJLj 


^7^= 


E 


L2JI 


Z3A 


JU 


(./^^ 


£^ 


Lh. 


kA. 


.24  ±i 


£a 


jj^: 


-^ 


^ 


Ma^j. 


&^ 


^ 


ULks^&My^isL 


JBaJj 


t.3q 


3JL 


5-*^ 


Fig.  110. — Pass-Book,  with  Debit  and  Credit  Pages. 


rORMS   Foil    HANKINCi   DKPARTMKNT. 


953 


Depositors  very  frequently  forget  to  bring  their  pass-books  when 
making  a  deposit.  In  such  cases  it  is  convenient  to  have  a  form  of  dupli- 
cate deposit-slip  to  hand  to  the  customer  in  lieu  of  the  entry  of  the 
deposit  in  his  pass-book.  Figure  112  shows  one  form  of  a  duplicate 
deposit-slip.  Instead  of  using  such  a  form,  however,  many  receiving 
tellers  simply  use  a  regular  deposit-slip  on  which  they  copy  the  total 
from  the  slip  handed  in  by  the  depositor,  write  the  word  "duplicate"  and 
sign  their  names  or  initials.  Sometimes  a  rubber  stamp  with  the  words 
"Duplicate. Teller"  is  used. 

The  next  need  of  the  depositor  is  a  check-book.  It  is  usual  to  have 
in  stock  several  varieties  of  these,  from  books  containing  fifty  checks  of  a 


THE  CITY  TRUST  CO 


Fig.  111.— Pass-Book. 


size  suitable  for  carrying  in  the  pocket  to  desk  check-books  containing 
three  hundred  or  five  hundred  checks,  three  or  more  on  a  page,  and 
sometimes  even  larger  ones.  The  customer  selects  a  check-book  in  accord- 
ance with  his  probable  needs.  If  his  account  is  to  be  of  a  considerable 
size,  he  leaves  his  order  for  the  preparation  of  a  book  of  checks  on  which 
are  to  be  printed  his  name  and  business.  This  is  often  provided  by  the 
company  without  charge  to  the  customer.  The  form  of  check  which  has 
come  to  bo  most  common  is  shown  in  Figure  113,  which  also  shows  the 
check  stub.  In  some  checks  the  place  for  the  number  of  the  check  is  at 
the  left  upper  corner,  and  in  otlurs  in  the  left  lower  corner.  Of  more  im- 
portance is  the  position  of  the  figures  showing  the  amount  of  the  check, 


254 


TRUST   COMPANIES. 


that  shown  in  Figure  113  being  the  result  of  an  evolution  in  check  forms, 
and  being  that  which  is  by  general  consent  regarded  as  the  most  con- 
venient. This  position  for  the  figures  is  quite  as  convenient  as  any  othei- 
for  the  person  writing  the  check;  while  for  the  bank  clerk  who  has  t-' 
read  off  rapidly  and  accurately  the  amounts  of  a  bunch  of  several  hun- 
dred checks  it  is  emphatically  the  most  convenient  place.     As  he  holds  the 


AMERICAN 

TRUST    COMPANY         Baltimore,  mp.      Ms^.  3     ,^6 


HAS  THIS  DAV  RECEIVED  A  DEPOSIT  OF 


.3^8', 


)(o 


TO  ACCOUNT  OF. 


(■A-<gtCon.-v<^ 


MEMORANDUM. 


.  cS   ^y^iCL^  d-g^-e^ 


.  This  Ticket  Must  »  Ri 

Fig.  112. — Duplicate  Deposit  Slip. 


bunch  of  checks  with  his  left  hand  and  turns  the  checks  with  his  right 
hand,  the  amounts  of  the  several  checks  as  given  in  figures  are  easily 
read  by  him  if  in  the  position  shown  in  Figure  113,  and  are  easily  com- 
pared with  the  written  amount  of  the  check.  If  they  appear  at  the  left 
end  of  the  check,  it  is  necessary  for  him  to  turn  each  check  to  read  the 
amount  in  figures.     It  would  be  a  great  boon  to  the  workers  in  banks 


Mss.^ 


'^tWv  7,    mL. 


NeW,VBK.N.J--^^^.'  7,          190,4    N°_4^_7 
Pay  to  the  oheeh of  6vxi^.l-/'_  O?  .  (B/Ler^Q-^v^    ^- ^  ^:?  [_ ^'12. 


113. — Check,  with  Stub. 


and   trust   companies   if   this   position    for   the   figures   were    universally 
adopted  on  all  checks  and  drafts. 

Check-books  are  usually  made  up  with  a  stub  for  each  check,  for  the 
purpose  of  enabling  the  customer  to  keep  a  record  of  his  checks  on  the 
stubs,  although  separate  sheets  for  such  records  are  sometimes  inserted 
in  the  check-book.    One  of  the  most  common  forms  of  such  stubs  is  shown 


rORMS   lOU   BANKINCi    DKPART.MENT. 


255 


with  the  check  in  Figure  113.  Figure  114  shows  another  form  frequently 
used  with  pocket  check-books.  That  shown  in  Figure  113  is  specially 
useful  where  three  or  more  checks  are  bound  on  each  page,  as  the  amounts 
of  all  the  checks  on  the  page,  being  extended  in  the  column  at  the  right, 
may  be  easily  footed  and  carried  forward  to  the  next  page.  A  record 
of  deposits  and  any  other  memoranda  such  as  the  customer's  reconcile- 
ment of  the  account  at  the  end  of  the  month,  may  be  kept  on  the  backs 
of  the  stubs. 

It  is  customary  to  provide  "counter  checks"  to  be  used  only  by  the 
customer  in  person  for  such  purposes  as  drawing  for  cash,  for  a  draft, 
etc.  Two  forms  of  such  a  check  are  shown  in  Figure  115  and  Figure  11 6. 
Sometimes  the  ordinary  check  of  the  company,  with  the  words  "Counter 
Check"  printed  on  it  in  large  type,  is  used  for  this  purpose. 


4^. 


3  0- 


i 


f^(RrjL(^  (R.   OS^r^v.^ 


/3UL-r-v~<XJL'Qy 


Dollars. 

Cenrs. 

^7<^ 

iG 

P.O  o 

1 1  n  ^ 

1  (o 

^f  3 

n  o 

^  L^f 

H-lo 

V\c..  114.— Check  Stih. 


Voucher  Checks. 

The  use  of  voucher  checks  is  steadily  increasing,  and  it  is  of 
importance  to  the  banks  and  trust  companies  to  encourage  the  use 
of  the  best  forms  for  such  checks.  Many  of  the  forms  in  use  are  exceed- 
ingly cumbersome  and  there  is  a  decided  lack  of  uniformity  in  them. 
The  name  of  the  paying  bank,  the  amount  of  the  check,  the  places  for 
receipt  and  for  endorsement,  are  found  in  all  conceivable  places  on  the 
check,  so  that  the  bank  clerk  who  has  to  handle  them  often  loses  valuable 
time  that  might  be  saved  if  there  were  a  uniform  style  of  voucher  check 
devised  with  a  view  to  convenience  in  handling.  Another  objection  to 
many  voucher  checks  is  that  the  bank  is  held  responsible  for  the  signa- 
tures of  a  number  of  different  persons  which  appear  on  the  check.  It 
is  unreasonable  to  ask  the  bank  to  be  responsible  for  more  than  two  such 
signatures;  if  the  concern  issuing  the  check  considers  it  necessary  to  have 


-256  TRUST   COMPANIES. 


^^;vyv.-    ^m/./  2^    yMl^j2£^ 


^  Q 

^     UJ     g     3     Ui 

^  ^  "  ^r^r^>(grg:h^r^ 

Fig.  115. — Counter  Check,  Receipt  Form. 

more  signatures  on  the  document,  the  official  who  signs  last  should  be 
responsible  for  the  previous  signatures,  the  responsibility  of  the  bank 
<;easing  with  the  final  or  at  most  with  the  last  two  signatures.  Other 
objections  to  many  voucher  checks  are  the  stating  of  conditions  of  pay- 
ment which  put  in  doubt  the  negotiability  of  the  instrument,  and  the 
requirement  of  both  a  receipt  and  endorsement  from  the  payee.  Whether 
the  receipt  adds  anything  to  the  endorsement  of  the  check  is,  to  say  the 
least,  a  matter  of  doubt;  and  it  certainly  adds  much  to  the  labor  of 
handling  the  check. 

Another  thing  to  be  noted  about  voucher  checks  is  that  the  folded 
check,  which  is  a  great  nuisance  to  the  banks,  is  often  used  when  a  single 
piece  of  paper  of  the  size  of  an  ordinary  check,  or  a  little  larger,  would 
answer  the  purpose  fully  as  well.  It  is  possible  to  provide  room  on  the 
face  or  back  of  the  check  for  such  detailed  statement  of  account  as  is 
usually  considered  desirable  on  a  voucher  check,  as  is  proved  by  several 
good  forms  of  such  instruments  that  are  in  daily  use.  Figure  117  shows 
an  excellent  form.  Its  size  is  8%  by  3%  inches — only  a  little  larger  than 
the  ordinary  check — and  yet  statement  space  is  provided  of  ample  width 
and  with  seven  lines  for  items.  The  back  of  this  check  is  plain  except 
for  the  words,  "Endorsement  by  the  payee  is  acknowledgment  of  full 
payment  and  satisfaction  of  the  within  account."  Another  form,  giving 
less  space  for  the  statement,  is  shown  in  Figure  118.     Figure  119  shows 


</> 


>  li-  J 

J  o  < 

Z     r,  Z 

Q, 


c/^—      ^.9^1 


irt    D    Z 


^%^^4^. NOT  NEGOTIABLE /2£B- 


^    CD    UJ    ?    ^    >    Z 


I  <  z 
<  h  m  < 


Fig.  116. — Counter  Check 


fi<3L.^^    y  (M-rs-^^yy-^ 


FORMS   rOR    HANKING   DEPARTMENT. 


257 


1 

Tt 

LK  MXHICET  AXB  FVl-TON  NaTIONAI-   BA-VIC    Of    N  KW  YoRK 

Vo- 

- 

■"^ 

t^ 

i 

I 

o 

■ 

— -— - 

~ 

Fig.  117. — Voucher  Check. 


r 


Ckvclani.O. 


.:^-o 

^i^—  ■— — ^^^  f  o((a 

T*  TMC   NATIOMAC  COMMCMCIAL  BANK 

CkXWCLANO,  O. 


'•"^ 


§^lbtkor^aroi. 


\om^«t  He.  '~ 


3l;;jiv;>  tr»m  5t»i  *ju*rph»«:  ^nnUnc^O. 


k 


feic^nkrc 


Fio.  118. — Voucher  Check. 


I 


id 


Pi>kButf„Vrk. 


THE  TV^ESTERN  TRUST  COMPANY 


THE  SANTA  CLAtU*  COMMERCIAL  CO. 

cT^y         • ft ft ^:-. 


I  ^a  •T4T«JiCVT  < 


I'lt;.  119. — Voucher  Check. 

a  form  having  provision  for  a  statement  at  the  end  of  the  check.  These 
forms  show  three  possible  places  on  the  face  of  a  check  for  the  statement. 
It  is  also  possible  to  provide  for  the  statement  on  the  back  of  the  check, 
as  shown  in  Figure  120,  which  represents  the  back  of  the  check  whose 
face  is  shown  in  Figure  121. 
17 


258 


TRUST  COMPANIES. 


It  is  certain  that  by  the  use  of  forms  similar  to  these  the  necessity  of 
folded  voucher  checks  could  often  be  avoided.  There  are  concerns,  how- 
ever, the  nature  of  whose  accounts  seems  to  require  the  folded  form  of 


Date. 

Amount. 

$ 

1 

This  check  is  in  fuU  payment  of  the 
above  account  and  the  payee  accepts 
it  as  such. 

Endorsements. 

No  other  receipt  is  necessary  or 
desired. 

Fig.  120. — Back  of  Voucher  Check. 


Xo.  lai.  Edgewatek,  N.J 190 

Palisades  Trust  and  Guaranty  Co. 

Examined  and 

registered.  OF  ENGLEWOOD,  N.  J. 

'Auditor.   "      ^^^  'TO  THE  ORDER  OF 

DOLLARS. 

Countersigned 

New  Jersey  and  Hudson  River  Rail\^ay  and  Ferry  Company. 

Vice-Pretident.  '      '"         '  Treasurer. 

Fig.  121. — Face  of  VorcHEE  Check. 


FORMS  FOR  BANKING  DEPARTMENT. 


259 


m 


ALUS  CHALMERS  COMPANY        No    <i002^ 


Chicago.Ill. 


iiwRtceipi  on  lef" ti<«olcn'..v*ii£l>i 
Pay  TO  THE  ORDER  OF  . 


Dollars 


TO  COMMERCIAL  NATIONAL  BANK 
CHICAOO.ILL. 


Allis-Chalmcrs  COMMNr. 


Fin.   l:i?:?.— Fack  ok  Fninrn  VorciiER  Cukck. 

voucher  check.  In  such  cases  the  convenience  of  the  banks  which  must 
handle  the  checks  would  be  greatl}'  conserved  if  all  information  needed  by 
the  bank  were  to  be  found  on  the  outside  of  the  check  when  folded.  It 
ought  not  to  be  necessary  for  the  bank  clerk  to  unfold  a  voucher  check 
as  he  handles  it  with  other  checks  in  the  regular  course  of  business.  The 
desired  result  can  be  accomplished  by  making  the  front  of  the  folded 
voucher  a  regular  check  form,  and  having  all  endorsements  appear  on  the 


ALLIS-CHALMKRS  COMPANY 


VOUCHCn-CHCCK. 


To. 


STATKMK?Pr 

OATC 

OKSCniVTIOM                                                             AMOUNT 

AMOUNT.            1 

• 

- 

- 

— 



j 

1 

Accoum  and  extenxons  corrtct                                                Approved  for  payment 

.....«.«^.«                                                                                                   e..»n»^.. 

Fio.  1'23. — Inside  or  Folded  Voucher  Check. 


260  TRUST   COMPANIES. 

back  of  the  folded  voucher.  Figure  122  shows  the  face  of  one  of  the 
best  forms  of  folded  voucher  checks  in  use.  It  will  be  noticed  that  this 
has  the  appearance  of  an  ordinary  draft-form  check.  The  other  side 
of  the  folded  voucher  is  blank  save  for  the  words  at  the  top,  "Make  all 
endorsements  here."  The  information  needed  by  the  bank  is  all  on  the 
outside  of  the  folded  voucher,  so  that  the  bank  clerk  is  not  put  to  the 
necessity  of  unfolding  this  document.  Although  a  receipt  in  addition  to 
an  endorsement  is  required,  such  receipt  appears  on  the  face  of  the  check, 
at  the  end,  where  it  is  easily  seen.  Some  voucher  checks  of  the  same  gen- 
eral form  as  this  one  do  not  call  for  a  receipt,  the  endorsement  being 
considered  all  that  is  necessary.     In  such  cases  the  check  usually  reads, 

"When  properly  endorsed,  pay  to  the  order  of  "  etc.,  "In  full 

payment  of  the  within  account."  From  the  standpoint  of  the  bank  this 
is  of  course  an  improvement  over  the  form  which  requires  both  a  receipt 
and  an  endorsement;  while,  as  already  suggested,  it  is  doubtful  whether 
the  drawer  of  the  check  gains  anything  by  having  the  receipt  in  addition 
to  the  endorsement.  Figure  123  shows  the  inside  of  this  voucher  check 
when  unfolded. 

Teller's  Records. 

The  different  tellers  keep  records  of  their  daily  work  and  prove 
its  correctness  on  books  or  sheets  of  paper  variously  known  as  "scratch- 
ers,"  "settlement  books,"  or  "proofs."  In  its  original  form  this  record 
was  merely  a  rough  memorandum  used  by  the  teller  to  balance  his 
cash,  containing  simply  lists  of  items  on  which  cash  was  received 
or  paid,  and  the  cash  count.  This  is  all  that  is  needed  in  a  small 
bank  having  only  one  teller  and  one  bookkeeper,  for  in  such  case  the 
keeping  of  a  complete  proof  such  as  is  described  below  is  merely  a  dupli- 
cation of  the  work  of  the  bookkeeper.  But  in  a  large  institution  having 
a  number  of  tellers  and  bookkeepers  the  system  of  proofs  should  be  such 
as  to  test  the  accuracy  of  each  man's  work  in  its  relations  to  the  work 
of  every  other  man  in  the  institution.  Such  systems  are  now  in  use  in 
the  most  progressive  companies,  and  have  put  an  end  to  the  continual 
"checking  back"  to  locate  •  errors  and  strike  a  balance  of  general  cash, 
which  was  and  is  a  burdensome  feature  of  the  work  in  banks  where  a 
general  system  of  proofs  is  not  in  use. 

The  particular  form  of  the  proof  for  each  teller  or  bookkeeper  will 
of  course  depend  upon  the  number  of  such  workers  and  upon  the  general 
arrangement  of  the  details  of  the  work  of  the  company;  but  the  principle 
upon  which  the  system  of  proofs  here  described  is  based  will  apply  to 
any  institution,  no  matter  what  the  number  of  workers  or  the  arrange- 
ment of  the  work.  This  principle  is,  that  the  proof  of  each  worker 
should  contain  a  separate  list  of  the  items  received  from  or  delivered 
to  each  of  the  other  workers.  This  is  illustrated  in  figures  124  to  127, 
from  a  study  of  which  the  system  will  be  made  clear.'^^    On  the  Receiving 

73  See  also  Figure  146. 


FORMS  FOR  BANKING  DEPARTMENT. 


261 


Tellers'  Proof,  figure  12t,  left-hand  page,  the  first  columns  provide  for 
the  listing  of  "Commercial  Credits,"  i.  c.,  deposits  received  for  checking 
accounts.  Space  is  provided  for  the  separate  listing  of  each  deposit; 
but  instead  of  this  the  teller  has  here  made  use  of  the  adding-machine, 
his  assistant  having  taken  the  deposit  slips  received,  at  frequent  intervals, 

RECEIVING  TELLER  CASH   PROOF 


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l-ic.    124.— Ueckivint.   Tki.i.kr's    Prook.    Lkft-Haxd    Pace. 


listed  them  on  the  adding-macl)ine  and  entered  the  totals  on  the  proof. 
By  reference  to  Figure  127.  under  tlie  heading  "Deposits"  at  the  right 
lower  corner,  it  will  br  seen  that  the  Individual  Bookkeepers'  Proof 
debits  the  receiving  teller  with  the  same  total  as  here  sliown  credited  to 
"Com'l  Credits,"  $1,230,068.77.     Under  "General  Book  Credits"  is  given 


262  TRUST   COMPANIES. 

a  list  of  all  credits  for  the  general  books  passing  through  the  hands  of 
the  receiving  teller.  The  total  of  these  items  agrees  with  the  total  of 
debits  to  the  receiving  teller  on  the  proof  of  the  general  bookkeeper.  On 
the  right-hand  page  of  Figure  124,  the  total  of  "Commercial  Debits/' 
$173,586.52,  will  be  seen  to  agree  with  the  total  listed  to  receiving  teller 


— 

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Fig.  124. — Receivixg  Teller's  Proof,  Right-Hand  Page. 


under  "Items  on  Us"  in  the  Individual  Bookkeepers'  Proof  (Figure  127). 
Here  again  the  teller  has  entered  on  his  proof  adding-machine  totals  of 
the  items,  instead  of  listing  each  item.  Referring  again  to  the  right- 
hand  page  of  Figure  124,  it  will  be  seen  that  the  items  and  the  totals 
listed  under  the  heading  "C   Paying  Teller,   Dr."  agree  with  the  items 


FORMS  FOR  BANKING  DFPARTMFNT. 


263 


listed  to  the  credit  of  the  receiving  teller  on  the  left-hand  page  of  Figure 
125.  If  all  the  i)roofs  in  the  system  were  here  shown,  it  would  be  seen  that 
the  list  of  debits  to  each  worker  on  tlie  receiving  teller's  proof  appears 
on  the  proof  of  such  worker  as  a  list  of  credits  to  the  receiving  teller, 
and  vice  versa.  It  is  therefore  evident  that  if  any  teller  or  bookkeeper 
fails  to  balance  on  completing  his  proof,  he  has  but  to  compare  his  proof 
■with  those  of  the  other  tellers  or  bookkeepers  to  locate  his  error.  If, 
for  example,  on  the  left-hand  page  of  Figure  125,  the  paying  teller  had 


PAYING   TEUER   CASH    PROOF 


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failed  to  credit  the  receiving  teller  with  the  $6.30  item,  his  proof  would 
show  a  total  credit  to  receiving  teller  of  $10,152.57  instead  of  $10,158.87, 
and  consequently  his  total  of  "Debit  Cash"  would  be  $6.30  less  than  the 
total  of  "Credit  Cash,"  showing  an  "over"  of  $6.30.  On  comparing  his 
proof  with  that  of  the  receiving  teller,  the  error  would  be  easily  located. 
Under  the  same  conditions,  without  a  general  proof  system,  this  little 
item  of  $6..'?0  might  cause  the  loss  of  several  hours'  time  in  "checking 
back."     It  is  evident,  too.  that  such  a  svstem  as  this  enables  each  worker 


264 


TRUST   COMPANIES. 


to  complete  his  own  work  as  soon  as  he  has  proved  its  correctness,  in- 
stead of  all  the  workers  being  delayed  by  the  error  of  one,  as  is  often 
the  case  where  no  general  system  of  proofs  is  used.  The  writer  has  seen 
the  introduction  of  such  a  proof  system  in  an  old  institution  result  in 
every  man  being  able  to  leave  the  bank  with  his  work  done  at  about  five 
o'clock,  whereas  under  the  old  conditions  it  had  been  the  custom  to  "check 
for  cash"  until  a  late  hour  in  the  evening  every  few  days. 


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Fig.  125. — Paying  Teller's  Proof,  Right-Hand  Page. 


Referring  again  to  Figure  124,  at  the  close  of  the  day  the  work  is 
summarized  by  entering  the  totals  of  the  various  columns  on  the  left- 
Land  page  under  the  heading  "Debit  Cash,"  and  the  totals  of  those  on 
the  right-liand  page  under  the  heading  "Credit  Cash."  If  the  work  is 
correct  the  totals  of  these  columns  will  agree,  as  shown  in  the  figure.  If 
they  do  not  agree  the  teller  proceeds,  as  already  suggested,  to  compare 
the  totals  of  the  columns  of  his  proof  with  those  shown  on  the  proofs  of 
the  other  tellers  or  bookkeepers,  and  thus  soon  finds  the  mistake. 


FORMS  FOR  BANKING  DEPARTMENT. 


265 


The  actual  count  of  cash  at  the  close  of  the  day  is  sometimes  listed 
on  the  proof,  and  sometimes  listed  on  separate  sheets  of  paper,  which 
are  preserved  for  some  months.  In  the  latter  case  the  total  count  only 
is  entered  on  the  proof,  as  shown  on  tlie  left-hand  page  of  Figure  125, 
the  first  item  under  "Credit  Cash,"  wliere  the  paying  teller  has  entered 
his  cash  count  total,  $66,303.71.  On  the  right-hand  page  of  this  same 
figure  the  teller  has  gone  to  the  pains  of  recording  the  names  of  the 
drawee  bank  and  the  last  endorser  of  each  clicck  cashed  by  him.  This, 
of  course,  involves  some  work,  but  is  evidently  a  valuable  safeguard. 


GENERAL  CASH  _ 

n(  cn.^Lt^i 

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CASH 

CLEARANCE               -^ 

CASH    ITEMS 

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Fig.   126.^ — Summary  or   Genehai,  Cash. 

Figure  126  sliows  tlie  "general  cash"  statement  made  up  by  the  pay- 
ing teller  at  the  close  of  tlie  day,  showing  the  total  cash,  cash  items  and 
clearance,  and  their  distribution  among  the  various  tellers. 


The    Individual   Books. 

The  Individual  Bookkeeper's  Proof,  which  is  a  part  of  the  general 
system  of  proofs,  is  shown  in  Figure  127.  Like  the  other  proofs  men- 
tioned it  is  of  course  devised  with  a  view  to  the  particular  needs  of  the 
company    using    it.     The  accounts  are  divided  alphabetically   into   four 


266 


TRUST   COMPANIES. 


groups,  as  shown  on  the  proof,  A  to  D,  E  to  J,  K  to  R  and  S  to  Z.  Under 
the  headings  named  the  proof  sliows  the  total  checks  for  the  day  against 
each  group.  These  are  summarized  at  the  right  lower  corner  of  the 
figure,  showing  a  total  of  $1,831,601.92,  which  agrees  with  the  total 
shown  under  "Items  on  Us,"  which  gives  the  same  items  arranged  ac- 
cording to  the  sources  from  which  they  came.  The  first  totals  under  the 
Leadings  "A  to  D,"  etc.,  are  those  of  the  checks  received  from  the  clear- 
ing-house. These  are  carried  to  the  places  indicated  under  the  heading 
"Summary"   at  the  left  lower  corner  of  the   figure,  where  is   given   the 


Fig.   137. — Individual  Bookkeeper's  Proof. 


proof  of  the  "Clearance."  Provision  is  made  for  the  listing  of  the  inev- 
itable corrections  of  the  clearance  lists.  The  column  headed  "Items  Out 
is  for  the  listing  of  items  received  by  the  individual  bookkeeper  in  the 
clearance,  but  which  belong  not  on  the  individual  books,  but  on  the  gen- 
eral books,  savings  books,  etc.  The  proof  of  the  credits  on  the  individual 
books  is  shown  just  above  that  of  the  debits  at  the  right  lower  corner  of 
the  figure.  The  total  of  the  adding-machine  list  of  deposits  received  by 
ihe  receiving  teller  is  placed  at  the  top,  and  with  this  must  agree  the 
totals  of  deposits  shown  on  the  ledgers. 


lOHMS    von    liANKINC;    DKPAHTMKNT.  267 

The  Boston  Ledger. 

For  the  keeping  of  individual  accounts  the  system  probably  most 
•common  is  that  of  using  the  "Boston"  combined  journal  and  ledger  for 
the  more  active  accounts,  together  with  a  journal  and  balance  ledger  for 
the  less  active  ones.  As  in  the  case  of  other  banks,  however,  local  condi- 
tions and  the  prevailing  character  of  the  accounts,  together  with  the  per- 
sonal preferences  of  the  officers,  result  in  the  choice  of  different  methods 
of  keeping  the  individual  accounts  in  different  companies.  On  the  aver- 
age the  commercial  accounts  of  trust  companies  are  apt  to  be  less  active 
and  of  smaller  balances  than  those  of  national  banks. 

The  "Boston  Ledger,"  a  form  of  which  is  shown  in  Figure  li28,  is  a 
combined  journal  and  ledger.  The  entries  are  made  directly  from  the 
deposit  slips  and  the  checks.  The  open  book  shows  the  work  for  one 
week,  that  for  the  first  three  days  being  on  the  left-hand  page,  and  that 
for  the  last  three  days  being  on  the  right-hand  page.  Figure  128  shows 
only  the  left-hand  page.  The  right-hand  page  is  ruled  in  the  same  way, 
with  the  headings  Thursday,  Friday  and  Saturday,  but  usually  does  not 
contain  a  column  for  the  names  of  depositors,  the  line  for  the  account  of 
each  depositor  being  followed  across  the  two  pages  without  repetition  of 
the  name  by  the  help  of  the  numbers,  which,  as  shown  in  the  figure,  are 
repeated  for  each  day.  A  further  aid  in  this  matter  is  to  have  the  trans- 
verse lines  ruled  in  two  or  three  different  colors.  In  the  sample  from 
which  Figure  128  is  engraved,  the  first  line  is  ruled  in  purple  ink,  the 
second  in  blue  and  the  third  in  red;  these  colors  being  repeated  in  the 
same  order  throughout  the  page.  Some  companies  have  the  name  re- 
peated on  the  second  page  as  an  additional  help  in  following  the  proper 
line  for  each  account.  In  making  up  the  book  it  is  customary  to  have 
three  out  of  every  four  pages  cut  "short,"  omitting  the  column  headed 
"names,"  so  that  four  weeks'  work  may  be  recorded  without  rewriting 
the  names.  A  convenient  plan  is  to  have  these  short  leaves  cut  just  after 
the  figures  in  the  column  immediately  following  the  list  of  names,  and 
the  page  creased  at  the  heavy  line  just  after  the  first  balance  column. 
Then  by  bending  over  this  first  balance  column  the  balances  for  Satur- 
<lay  are  extended  therein,  so  that  when  it  is  folded  back  again  the  bal- 
ances appear  just  before  the  work  for  the  following  Monday  without 
copying.  The  method  for  proving  the  work  for  each  day  on  each  page 
of  this  ledger  is  simple.  If  the  work  has  been  done  correctly,  the  total 
of  the  balance  column  for  the  preceding  day,  plus  the  total  of  the  de- 
posits column  and  minus  the  total  of  the  total  checks  column,  must  equal 
the  total  of  the  day's  balance  column. 

While  the  form  of  Boston  I-edger  shown  here  is  probably  the  most 
common  one,  several  variations  from  it  are  often  found.  Many  companies 
prefer  to  have  the  deposits  column  follow  immediately  after  the  balance 
column,  so  that  the  bookkeeper  may  more  readily  "extend"  the  balances 
in  his  head,  the  principle  being  that  with  this  arrangement  he  can  more 


268                                     TRUST 

( 

:c 

MPANIES. 

Mdnday.      r/,.v 

1% 

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189' 

f 

NHWeS 

BAIANCF 

Checks  in  Detail 

Total  Check! 

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Fig.  128. — Bostox  Ledger. 


easily  add  the  deposits  to  the  previous  balance  and  subtract  the  total 
checks  from  the  sum  of  the  two.  This  process  is  a  rather  puzzling  one 
to  the  novice,  but  the  experienced  worker  on  the  Boston  Ledger  does  it 


FORMS   rOK   IJAXKIXG   DEPARTMENT. 


269 


Tu$?<jay.     (li... 

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with  ease.  The  older  forms  of  Boston  Ledger  provided  both  a  debit  and 
a  credit  balance  column,  and  this  form  is  still  in  use.  The  more  common 
plan,  however,  is  to  have  the  debit  balances  appear  in  red  ink,  so  that 
only  one  balance  column  is  needed.     In  the  larger  companies  the  names 


270  TRUST   COMPANIES. 

of  the  customers  are  usually  printed  in,  thus  saving  the  bookkeeper  much 
tedious  copying.  The  size  of  the  page  is  usually  about  twenty-two  inches 
wide  by  eighteen  inches  deep;  the  number  of  accounts  on  a  page  varying 
from  twenty  to  forty,  depending  upon  the  depth  of  the  page  and  the 
space  between  the  lines.  The  accounts  are  arranged  in  alphabetical 
order,  several  lines  being  left  after  each  letter  for  new  names  that  may 
need  to  be  added.  In  large  banks  each  ledger  contains  the  accounts  be- 
ginning with  certain  letters  of  the  alphabet  only:  e.  g.,  one  contains  ac- 
counts whose  initial  letters  are  from  A  to  K,  and  another  those  whose 
initial  letters  are  from  L  to  Z.  The  letter  "B"  appearing  after  several 
of  the  balances  in  the  figure  indicates  that  the  pass-books  of  the  custom- 
ers indicated  were  balanced  on  the  dates  shown.  A  check  mark  (V)  is 
often  used  for  this  purpose,  instead  of  "B." 

The  Boston  Ledger  has  some  decided  merits  and  some  distinct  de- 
fects. Its  merits  include  the  great  saving  of  time  and  labor  in  the  com- 
bining of  journal  and  ledger,  which  does  away  with  posting;  the  readi- 
ness with  which  the  total  day's  work  may  be  proved;  the  grouping  of  all 
the  accounts  on  a  few  pages,  making  it  easy  to  compare  the  balances  in 
different  accounts;  the  prominence  with  which  overdrafts  appear,  insur- 
ing that  they  shall  not  be  overlooked. 

Among  the  defects  of  this  ledger  are  the  ease  with  which  items  may 
be  entered  on  the  wrong  line  and  so  be  made  to  appear  against  the  wrong 
accoimt ;  the  fact  that  it  is  comparatively  difficult  to  ascertain  the  average 
balances  that  a  given  customer  has  carried  for  a  series  of  weeks  or 
months;  and  the  fact  that  the  balances  of  inactive  accounts  must  be  car- 
ried forward  day  by  day  along  with  those  of  active  accounts.  The  size 
of  the  book  is  also  considered  objectionable  by  some. 

The  fact  that  the  Boston  Ledger  is  not  adapted  to  the  carrying  of 
inactive  accounts  has  led  to  the  introduction  of  the  system  already  men- 
tioned, of  using  both  a  Boston  Ledger  and  a  balance  ledger  (Figure  130), 
with  a  special  journal  for  the  latter.  The  more  active  accounts  are  carried 
in  the  Boston  Ledger  and  the  less  active  ones  in  the  other  ledger,  which  is 
sometimes  called  the  "inactive  ledger,"  and  sometimes  the  "petty 
ledger."  The  total  of  the  balances  in  the  petty  ledger  is  carried  as  an 
accoimt  in  the  Boston  Ledger,  so  that  the  total  of  balances  in  the  latter 
shows  the  total  balances  for  the  whole  set  of  books. 

Figure  129  shows  a  form  of  journal  to  be  used  in  connection  with 
the  petty  ledger,  containing  also  a  form  for  the  proof  of  posting.  This 
form  of  journal  (or  "scratcher"  as  some  prefer  to  call  it)  is  a  great  im- 
provement over  the  old  form  in  which  the  deposits  were  recorded  on  one 
page  and  the  checks  on  another,  as  the  names  of  depositors  having  both 
deposits  and  checks  need  to  be  written  but  once,  while  nothing  is  sac- 
rificed in  the  way  of  clearness  or  completeness  of  the  record.  On  the 
left  of  the  page  the  first  column  contains  the  detailed  list  of  checks  and 
the  second  column  the  total  checks  against  each  account.  Columns  are 
provided  for  the  check-marks  used  in  posting.     The  first  column  at  the 


FORMS   lOR   BANKING   DEPARTMENT. 


271 


right  of  tlie  page  is  for  the  listing  of  deposits ;  while  the  two  other  col- 
umns are  for  the  proof  of  posting.  This  furnishes  a  daily  trial  balance 
of  all  accounts  active  for  the  day.  In  the  first  column  are  listed  the  old 
balances,  and  in  the  second  column  the  balances  shown  by  the  ledger 
accounts  after  the  day's  items  are  posted.  At  the  bottom  of  the  "Old 
Balance"  column  is  listed  the  total  of  the  day's  credits ;  and  at  the  bottom 
cf  the  "New  Balance"  column,  the  total  of  the  day's  debits.  Then,  if 
the  work  has  been  done  correctly,  the  footings  of  the  two  columns  will 
agree.  While  this  proof  of  posting  adds  somewhat  to  the  bookkeeper's 
daily  work,  it  insures  the  correct  extension  of  balances,  and  lightens  the 
task  of  th(    monthly  trial  balance  of  all  the  accounts  in  the  ledgers. 


^tt?  Journal. 

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A  form  of  ledger  used  with  the  journal  just  described  is  shown  in 
Figure  130.  This  is  a  modified  form  of  the  "Cincinnati"  or  three-column 
balance  ledger.  As  compared  with  the  Boston  Ledger,  this  has  the  ad- 
vantage of  showing  the  balances  of  each  account  for  a  long  period  in  a 
form  that  makes  it  convenient  to  see  at  a  glance  the  average  bal- 
ance; while  the  carrying  forward  of  unchanged  balances  is  avoided. 
This  form  may  be  used  in  either  a  bound  book  or  a  loose-leaf  binder.  The 
latter  is  preferable,  because  it  permits  the  arranging  of  the  sheets  in 
alphabetical  order,  making  an  index  unnecessary;  and  because  each  ac- 
count may  be  given  as  many  or  as  few  pages  as  it  needs.  The  size  of 
the  sheet,  exclusive  of  binding  space  for  a  loose-leaf  binder,  is  about 
eleven  bv  twelve  inches. 


272 


TRUST  COMPANIES. 


Another  form  of  check  and  deposit  journal  is  shown  in  Figure 
131.  This  is  arranged  much  the  same  as  the  "Petty  Journal"  shown  in 
Figure  129,  but  does  not  include  the  columns  for  proof  of  posting.  The 
latter  may  be  written,  if  desired,  on  separate  sheets  of  paper;  it  may^ 
by  the  exercise  of  a  little  ingenuity;,  be  taken  off  on  the  adding  machine; 
while  some  companies  dispense  with  it  altogether,  relying  upon  the 
monthly  trial  balance  to  detect  any  possible  errors  in  the  computation  of 
balances. 


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In  some  companies,  particularly  in  the  older  and  larger  companies  in 
the  East,  the  old  plan  of  having  both  debit  and  credit  "scratchers"  or 
journals  is  still  in  use.  Under  this  plan  the  checks  are  listed  on  check 
scratchers,  a  form  of  which  is  shown  in  Figure  132,  and  the  deposits 
are  listed  on  deposit  scratchers,  a  form  of  which  is  shown  in  Figure  133. 
In  both  of  these  forms,  the  columns  at  the  right,  not  filled  in  in  the  fig- 
ures, are  for  the  continuation  of  the  work  begun  in  the  first  columns,  thus 
giving  space  for  more  entries  on  each  page.     Often,  however,  only  the 


rOHMS    FOR    l?ANKI\f;    DKPARTMFA'T. 


273 


single  ruling  is  includtd  on  each  page.  Various  forms  of  ledgers  are 
used  with  these  scratchers,  some  companies  still  continuing  the  use  of  the 
old-fashioned  two-column  ledger,  without  a  balance  column — the  ruling 
of  the  ledger  being  practically  the  same  as  that  shown  in  Figure  133, 
with  the  addition  of  date  columns  on  both  debit  and  credit  sides.  In  the 
newer  companies,  however,  it  is  far  more  usual  to  employ  one  of  the 
various  forms  of  ledgers  having  balance  columns. 


Fio.  131.— Check  and  Deposit  Joirsai.. 


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Via.  133. — Deposit  Scratches. 


A  number  of  plans  have  been  devised  to  lessen  the  labor  of  keeping 
individual  accounts,  the  particular  aim  being  to  do  away,  so  far  as  pos- 
sible, with  the  entering  of  items  on  both  journal  and  ledger,  the  items 
being  entered  in  the  ledger  directly  from  the  original  credit  or  deposit 
slips  and  from  the  checks.  Figures  134  and  135  illustrate  one  set  of 
forms  devised  with  this  end  in  view.  The  ledger,  shown  in  Figure  135, 
is  a  modified  form  of  Boston  Ledger,  involving  some  of  the  features  of 
that  ledger  and  some  of  the  "Cincinnati"  or  three-column  balance  ledger. 
It  may  be  either  permanently  bound  or  used  with  a  loose-leaf  binder,  the 

IS 


274 


TRUST   COxMPANIES. 


Cteck  artaOejiasIt  Journal.  Self-ProtHng  Trial  talamem 

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latter  being  more  usual.  The  entries  are  made  in  this  ledger  directly 
from  the  deposit  slips  and  the  checks;  and,  as  will  be  seen  from  the  fig- 
ures, all  the  detail  work  is  done  in  the  ledger.  As  each  account  is  posted 
ill  the  ledger  from  the  original  items,  the  total  debits  and  the  total  credits, 
together  with  the  old  and  the  new  balances,  are  entered,  from  the  ledger, 
in  the  form  shown  in  Figure  134,  which  is  an  abbreviated  journal  com- 
bined with  a  proof  of  posting.     Here,  it  will  be  noticed,  the  old  practice 


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Fig.  135. — Individual  Ledger. 


FORMS   rOR    RANKING   IM-.PARTMENT. 


275 


PHB  PRUDENTIAL  TRUST 
COMPANY 


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is  reversed — the  items  being  posted  from  the  ledger  into  the  journal,  in- 
stead of  vice  %ersa.  The  use  of  the  so-called  journal  in  this  case  is  merely 
to  record  the  total  day's  work  in  compact  form,  and  to  prove  that  all 
items  have  been  entered  in  the  ledger.  In  order  to  abbreviate  the  work 
as  much  as  possible,  the  accounts  under  each  letter  of  the  alphabet  .ire 
numbered  from  1  up:  those  whose  initi.il  letter  is  A  being  numbered  Al. 


276 


TRUST   COMPANIES. 


A2,  A3,  etc.;  those  whose  initial  letter  is  B  being  numbered  Bl,  B2,  B3, 
etc.  In  the  journal  (Figure  134)  instead  of  the  names  of  the  accounts 
these  numbers  are  entered  as  a  means  of  identifying  the  items.  When 
the  work  of  the  day  is  completed,  this  "journal"  will  contain  the  totals 
of  all  the  credits  and  debits  for  the  day;  and  if  the  work  has  been  done 
correctly,  the  totals  of  the  "Checks"  and  "Deposits"  columns  will  agree 
with  the  totals  of  these  items  as  shown  on  the  proofs.  At  the  same  time 
the  footings  of  the  "Old  Balance"  and  the  "New  Balance"  columns,  with 
the  total  deposits  added  to  the  former,  and  the  total  checks  added  to  the 
latter,  will  agree  and  furnish  a  proof  of  posting  in  the  same  manner  as 
was  explained  in  connection  with  Figure  129-  If  several  ledgers  are 
used,  as  is  necessary  in  the  larger  companies,  one  of  these  journals  is  of 
course  used  with  each  ledger. 

The  custom  of  paying  interest  on  daily  balances  on  checking  accounts 
which  have  satisfactory  balances  is  a  growing  one.  The  terms  on  which 
interest  is  allowed  vary  somewhat  in  different  localities,  but  interest  at 
the  rate  of  two  per  cent,  per  annum  on  daily  balances  of  $500  or  over  is 
quite  common.  For  the  sake  of  convenience  it  is  usual  to  compute  and 
credit  the  interest  about  the  28th  of  each  month.  The  interest  statement 
is  then  ready  to  hand  to  the  customer  with  his  returned  vouchers  when 
his  book  is  balanced  on  the  first  of  the  next  month.  Figure  136  shows  a 
form  of  such  an  interest  statement.  It  will  be  noticed  that  the  balances 
are  written  in  thousands  and  hundreds  of  dollars  only,  the  figures  in  the 
units  and  tens  columns  being  omitted.  This  method  is  followed  in  many 
institutions  as  a  means  of  lessening  the  work,  as  it  cannot  in  any  case 
cause  more  than  a  slight  difference  in  the  amount  of  interest  allowed. 
Sometimes  the  interest  rule  specifies  that  interest  will  be  allowed  on  even 
hundreds  of  dollars  only. 

Figures  137  and  138  show  two  forms  of  ledgers  devised  with  a  view 
to  assist  the  bookkeeper  in  the  computation  of  interest  on  accounts.  In 
Figure  137,  in  the  column  headed  "Days,"  is  entered  the  number  of  days 
that  each  balance  stands  undisturbed.  In  the  next  column,  headed  "Ag- 
gregate," is  placed  the  product  of  the  balance  and  the  number  of  days. 
The  principle  involved  in  the  figuring  of  the  interest  is  the  same  as  that 
used  in  Figure  136;  namely,  that  the  interest  on  any  given  amount  for  X 
days  IS  the  same  as  the  interest  on  X  times  that  amount  for   one  day. 


/li.  S.  Sjii 


E 

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om. 

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.... 



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, 

Fig.  137. — Individual  Ledger,  for  Accouxts  ox  Which  Interest  is  Allowed. 


FORMS  FOR  BANKING  DEPARTMENT. 


277 


Thus,  on  the  first  line  of  Figure  137,  the  interest  on  $2,517.50  for  four 
days  is  the  same  as  the  interest  on  four  times  $2,517.50,  or  $10,070,  for 
one  day.  Hence,  if  at  the  end  of  the  interest  period  (usually  the  28th 
of  each  month)  the  items  in  the  column  headed  "Aggregate"  be  added, 
the  interest  for  one  day  on  the  sum  so  obtained  represents  the  correct 
interest  on  the  daily  balances  of  the  account  for  the  month.  Figure  138 
represents  the  top  portion  of  a  ledger  sheet  which  facilitates  the  compu- 
tation of  interest,  groups  four  accounts  on  each  page,  and  shows  on  one 


- 

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Fig.  138 — Individual  Ledger  fob  Accounts  on  Which  Interest  is  Allowed. 

page  the  balances  of  each  account  for  one  month.  Down  the  first  column 
at  the  left  of  the  page  are  printed  the  numbers  of  the  days  of  the  month ; 
the  numbers  beginning,  however,  with  the  29th  of  the  month,  and  extend- 
ing through  the  28th  of  the  following  month.  This  arrangement  of  the 
numbers  is  due  to  the  fact  already  noted,  that  it  is  customary  to  compute 
interest  at  the  close  of  the  28th  of  each  month;  and  the  page  represents 
the  work,  not  of  a  calendar  month,  but  of  an  "interest  month."  At  the 
bottom  of  each  of  the  four  sub-divisions  of  the  page  is  printed  "Interest 
at  per  cent.,  $ ."     At  the  close  of  the  month  the  balance 


^ 


g,^. 


^ 


3><>u>^ 


±ii 


Olt«u^ 


.     CUU. 


£^14 


UffL. 


JLtt^ 


i^^±a 


CR.J*. 


n^itu 


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LLtSiS Llaa* 


Fig.  139. — Trial  Balance  Book. 


columns  are  footed,  and  the  interest  for  one  day  on  the  totals  represents 
the  interest  for  the  month  on  the  accounts.  By  the  use  of  "short"  leaves, 
cut  at  the  top  on  the  line  just  above  the  headings  of  the  columns,  the 
work  may  be  continued  for  several  months  without  transferring  the  names 
and  balances. 

Whatever  form  of  ledger  is  used  for  individual  accounts  a  trial  bal- 
ance should  be  taken  once  a  month,  except  where  the  Boston  Ledger  is 
used,  in  which  case  the  ledger  itself  furnishes  a  daily  trial  balance.     For 


278 


TRUST   COMPANIES. 


the  purpose  of  taking  such  trial  balances,  many  companies  use  a  trial- 
balance  book,  a  form  of  which  is  shown  in  Figure  139-  The  open  book 
may  show  the  trial  balances  for  one  year,  twelve  columns  being  provided 
for  the  twelve  months.  By  having  some  of  the  leaves  cut  short,  along 
the  heavy  line  just  before  the  January  column,  the  work  for  several  years 


Statement  of  Account       "^^ending- 


^   t90^S~ 


In  account  with  the. 


Verified  by 
Bank. 


.Vouchen  returned. 


CHECKS 

CHECKS 

DEPOSITS 

No. 

Day 

Amount 

No. 

Day 

Amount 

Day 

Amount 

I 

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Please  examine  balances  and  vouchers  and  report  at  once  if  any  error  is  found. 

Fig.  140. — Statebient  of  Account. 


FOR>rS  I'OR  RANKING  DEPARTMENT. 


279 


may  be  shown  without  rewriting  the  names;  but  in  such  case  a  consider- 
able space  should  be  left  after  the  lists  under  each  letter  of  the  alphabet, 
for  the  insertion  of  the  names  of  new  accounts.  Overdrafts  are  entered 
in  red  ink  in  this  form  of  balance  book:  but  some  forms  provide  two  col- 
umns, one  for  credit  balances  and  one  for  debit  balances.  In  many  insti- 
tutions, the  introduction  of  the  adding  machine  h;)s  done  away  with  the 
trial-balance  book,  the  trial  balances  being  taken  off  on  the  adding- 
machine,  which  is  of  course  a  much  quicker  and  easier  way.  These  add- 
ing-machine  lists  are  preserved  by  pasting  them  in  scrap-books,  or  by 
filing  them  in  envelopes. 

An  important  part  of  the  duties  of  the  individual  bookkeeper  or  of 
his   assistant  lies   in  the  careful   preservation   of  deposit  tickets   and   of 


STATBiaCNT    OP    ACCOUNT 


a-?"' ' 


Dr. 

( 

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hlOMll 

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Fig.  141. — STATFttENT  OF  Account. 

checks.  The  latter  are  cancelled  at  the  close  of  the  day's  business,  and 
filed  away  alphabetically  by  the  names  of  the  drawers  until  the  pass- 
books are  written  up  and  the  checks  returned  to  the  customers.  The  de- 
posit tickets,  which  are  kept  permanently  by  the  company,  are  filed  either 
by  dates,  all  tickets  for  the  day's  work  being  filed  together  in  alphabetical 
order,  or  alphabetically  by  the  names  of  the  depositors;  some  companies 
preferring  the  one  method,  and  some  the  other. 

The  pass-books  for  all  active  accounts  should  be  balanced,  and  the 
checks  returned  to  the  depositors  as  vouchers,  once  a  month.  The 
methods  of  balancing  or  "writing  up"  the  pass-books  have  been  sho^vn 
in  Figures  110  and  111.  In  practice  it  is  found  to  be  a  diflScult  matter 
to  get  all  customers  to  bring  in  their    pass-books    for    balancing    each 


280 


TRUST  COMPANIES. 


month;  and  there  is  always  a  considerable  number  of  depositors  who  fre- 
quently fail  to  bring  their  pass-books  when  making  deposits.  These 
facts,  together  with  other  considerations,  have  led  many  companies  to 
adopt  the  practice  of  sending  monthly  statements  of  accounts  to  all  de- 
positors, the  pass-books  being  used  merely  as  the  depositor's  record  of 
deposits  made.  Figures  140,  141  and  142  show  different  forms  of  state- 
ments of  account,  those  in  Figures  141  and  142  being  practically  copies 
of  the  ledger  accounts  in  the  old-style  debit  and  credit  ledger  and  the 
balance  ledger  respectively.  Some  companies  have  the  statements  kept 
up  regularly  as  duplicate  ledgers.     The  advantages  of  such  a  practice 


STATEMENT  OF  ACCOUNT 


CHl^jLu.  <Rp^ 


DATB 

MBMO. 

WITHDRAWN 

DEPOSITBO 

BALANCE 

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//. 

Fig.  142. — Statemekt  of  Account. 


are  twofold:  it  furnishes  a  check  upon  the  correctness  of  the  work  on  the 
regular  ledgers,  and  it  keeps  the  statepients  always  up  to  date,  so  that 
the  customer  may  be  furnished  with  a  statement  of  his  account  on  de- 
mand. The  plan  also  distributes  the  work  of  preparing  statements 
throughout  the  month,  instead  of  requiring  it  all  to  be  done  at  the  close 
of  the  month,  as  is  the  case  where  the  pass-books  are  called  in  for  bal- 
ancing. If  the  duplicate  ledgers  are  kept  by  a  separate  set  of  book- 
keepers, a  check  is  obtained  against  possible  dishonest  practices  on  the 
part  of  any  one  bookkeeper.  Figure  143  shows  another  form  of  state- 
ment of  account,  which  is  printed  on  the  face  of  an  envelope,  in  which 
the  vouchers  are  enclosed  when  the  statement  is  handed  to  the  depositor. 


FORMS  FOR  BANKING  DEPARTMENT. 


-VOUCHERS  RETURNED 

THE  STATE  BANKING  a  TRUST  CO. 


281 


If  M  rc»Mt  U  MMle  wlUiln  10  d«yt.  tccaunt  will  be 

conildcrcd  eorrcel 

». 

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Fio.  143. — Statement  of  Account. 

It  is  not  the  usual  practice  to  take  the  depositor's  receipt  for  the 
vouchers  returned  to  him;  but  this  is  done  by  some  companies,  and  there 
are  those  who  maintain  that  a  receipt  in  such  a  case  is  quite  as  important 
as  a  receipt  for  any  valuable  papers.  One  form  of  such  a  receipt  reads 
as  follows:  "Received  from  the  Blank  Trust  Company  of  Chicago,  Illi- 
nois, my  pass-book,  balanced,  with  paid  checks.     Unless  advised  ta 


282  TRUST   COMPANIES 

the  contrary  within  five  days,  the  balance  may  be  considered  correct,  and 
the  paid  checks  in  all  respects  genuine." 

A  troublesome  thing  for  the  individual  bookkeeper  to  handle  is  the 
stopping  of  payment  on  customers'  checks.  Sometimes  a  rack  is  provided, 
in  which  are  placed  cards  like  that  shown  in  Figure  144,  containing  de- 
scriptions of  the  checks  of  which  payment  is  ordered  stopped.     Another 

PAYMENT    STOPPED.  hatp  -^kjoip 


^. 


ORDER  OF. 
REASON 


.    2>?><^ AMOUNT,  $JL2j^1^=^ 


PRESENTED  AND  MARKED ORDERED  PAID 

WROTE  MAKER _ 

1-2-02 

Fig.  144. — Stop-Paybient  Memorandum. 

plan  is  to  paste  on  the  ledger  a  slip  like  that  shown  in  Figure  145.  A 
third  plan,  and  probably  the  safest  one,  is  to  make  duplicates,  from  the 
descriptions  furnished,  of  all  checks  of  which  payment  has  been  ordered 
stopped.  When  the  incoming  checks  are  arranged  in  order  for  entry  in 
the  books  each  day,  these  duplicates  are  inserted  in  their  proper  order 
with  the  other  checks,  so  that  the  memorandum  is  found  where  the  book- 


STOP  PAYMENT  ou  CHECK  :So_132xS....   I 

Bated I^leuj;^.. 19ok...  For  SJ.Z£.^ I 

Drairu    bj/^^p^  ^.€5-:,........... __ ....,......_. ..._....  I 

I  Favor  of    hJ.iM:^<^y>^..^^^^^ ._. „^...  I 

Remarks  ....^bMufc.....,^ .,,.. .t.^. ,,„........ | 

Fig.    145. — ^Stop-Payment  Memorandum. 


FORMS  FOR  BANKING  DEPARTMENT. 


283 


keeper  cannot  easily  overlook  it.  These  duplicates  are  kept  and  used 
daily  for  a  week  or  two,  after  which  time  the  date  of  the  check  will  of 
itself  put  the  bookkeeper  on  his  guard  against  paying  it  without  investi- 
gation. 

The  General  Books. 

If  a   general   system   of   proofs,   such   as    that   described    in    connec- 
tion with  figures  121  to  127,  is  in  use,  the  first  form  needed  by  the  gen- 


GENERAL   BOOKKEEPER   PROOF                           | 

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eral  bookkeeper  for  the  record  of  the  day's  work  is  liis  jiroof,  a  form 
of  which  is  shown  in  Figure  146.  On  this  proof  he  lists  the  items 
received  from  or  sent  to  the  other  workers,  in  the  same  manner  as 
has  already  been  described  for  the  tellers'  ])roofs.  figures  12i  to  I'JT. 
When  all  of  the  items  (except  the  bookkeepers'  totals)  have  been 
entered,  the  totals  are  listed  in  the  places  indicated  under  the  head- 
ing "Summary"  at  the  right  of  the  bottom  of  the  proof:  and  if  the  work 
has  been  done  correctly,  the  total  of  the  debit  items  will  agree  with  the 


Q8h 


TRUST  COMPANIES. 


total  of  the  credit  items.  The  bookkeeper  then  has  a  proof  of  the  cor- 
rectness of  his  work  for  all  items  except  the  totals  to  be  furnished 
liim  by  the  individual  bookkeepers,  draft  tellers,  etc.  When  such  totals 
are  received  they  are  entered  in  their  designated  places  under  the  head- 
ing "Summary"  at  the  left  of  the  bottom  of  the  proof,  where  are  also 
entered  the  totals  of  the  general  book  items  listed  on  the  proof.  Mean- 
time the  general  journal  is  written  up,  and  the  correctness  of  the  work 
there  is  indicated  if  the  total  debits  and  total  credits  agree  with  such 
totals  as  shown  by  the  final  "Summary"  on  the  proof.  The  difference 
between  these  totals  shows  the  amount  of  "general  cash"  at  the  close  of 
the  day's  business;  and  with  this  figure  the  amount  of  "general  cash" 
shown  by  the  paying  teller's  summary  of  general  cash,  figure  126,  must 
agree. 


6oo 


:>oc 
S'oo 


fzs 


5-/^72. 


Fig.  147. — General  Jourkal,  Left  Page. 


For  a  general  journal  many  companies  still  use  the  old-style  two- 
column  journal  with  debit  and  credit  pages.  Figure  147  shows  the  left- 
band  or  debit  page  of  such  a  journal.  The  right-hand  page  is  ruled  ill' 
the  same  way,  having  the  heading  "Cr."  instead  of  "Dr."  Much  more 
convenient  than  the  old  form  is  the  improved  general  journal  shown  in 
Figure  148,  in  which  debits  and  credits  are  entered  on  one  page,  and  the 
names  of  the  accounts,  being  in  the  center,  need  not  be  repeated  for  debit 
and  credit  entries.  The  width  of  the  page  is  about  13%  inches.  Figure 
149  shows  another  form  of  one-page  general  journal,  having  a  different 
arrangement  of  the  amount  and  explanatory  columns. 

For  a  general  ledger,  the  old  style  ruling,  without  balance  columns, 
is  still  in  use  by   some  companies;  but  ledgers  having  balance  columns^ 


FORMS    1  OH    HANKING   DF.PARTMENT. 


285 


•are  decidedly  preferable,  and  are  in  general  use.  Figures  150  and  151 
show  two  forms  of  such  a  ledger — that  shown  in  figure  151  being  the 
better  of  the  two,  because  it  more  distinctly  separates  debit  and  credit 
items.  These  ledgers  may  be  either  permantntly  lH)und  or  in  loose  leaf 
form. 


Fig.  148. — Geveral  Joubxat.. 


GENERAL  JOURNAL. 


'"s^w-X.'^ 


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l^P^'fiS^^ 


fc 


i^LS^k:^ 


^b^.ri  'tii.  '•■ 


<l/&i- 


Fig.  149. — Gexeuai.  Joirkai,. 


3^ 

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Fig.  IjO. — Genk.rai.  Ledger. 


286 


TRUST   COMPANIES. 


The  general  bookkeeper  enters  the  balances  from  the  general  ledger 
in  the  daily  statement  (or  balance)  book,  which  serves  the  double  pur- 
pose of  a  daily  trial-balance  of  the  general  accounts  and  a  condensed 
statement,  which  enables  the  officers  to  see  the  condition  of  the  company 
at  a  glance. 


GENERAL  LEDGER- 


.>^/^.. 




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Fig.  151. — Gexeral  Ledger. 


In  its  simplest  form  this  book  is  merely  a  list  of  the  balances  of  the 
general  ledger  accounts,  so  arranged  that  separate  footings  may  be  taken 
of  the  debit  and  credit  balances,  to  show  their  agreement.  Figure  152 
shows  an  old  form  of  daily  statement,  in  which  the  accounts  are  listed 
in  the  order  in  which  they  are  found  in  the  bound  general  ledger.     As 


V^,? 

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Fig.  152. — Daily  State  jiext,  Old  Style. 


FORMS  FOR  BANKING  DEPARTMENT. 


287 


Daily    Balances. 


RESOURCES 

'fA.i,  "-fcs 

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Fig.  153. — Classified  Daily  Statemekt. 


will  be  seen,  two  colimins  are  required  for  each  day's  statement;  and  the 
book  is  usually  arranged  to  show  a  week's  work  on  each  double  page. 
By  having  some  of  the  pages  "cut  short"  along  the  line  just  after  the 
names  of  the  accounts,  the    frequent    rewriting  of    the  names    may  be 


^88 


TRUST  COMPANIES. 


The  Blank    Trust  Company. 


New  Commercial  Accounts  Opened i3_ 

Commercial  Accounli  Cloted  L_ 

Total  No.  of  Open  Com'l  Acc'ls  9-'^  f< 


New  Savings  Accounts  Opened        ^^^ — 

Savings  Accounts  Closed  . ^ — 

Total  No.  of  Open  Savings  Acc'ts      ,^.^-y<f 


OiLxU  S"     ■      /q^v5~ 


Ji^ 


ICO 


Collai 


1^1>iM4 


Savings  Deposits 


£4 


Bills  Discounted 


Special  Deposits 


^Ui 


Commercial  Deposit 


^S  OOP 


gs 


Bankers  National  1 


Cerlfs.  of  Deposit,  Spec, 


Seaboard  National  Bank 


l£o 


Certfs.o{Det>osit,4% 


-La 


Bank  Building 


Certfs.  of  Deposit,  3% 


^S3^2 


Furniture  and  Fixturt 


Detosil  Loan  Payments 


Tjeal  Estate 


Current  Earnings 


^HM 


£^ 


Stocks  and  "Bonds 


d££.200 


Undivided  Profilt 


An 


U 


Interest  "Due  and  Unpaid 


Current  Expenses 


n 


Int.  Paid  on  Certif.  of  Deposi 


kJ. 


Int.  Paid  on  Commercial  Accounts 


T£^ 


Int.  Paid  on  Savings  Accounts 


^mn 


lolc'^S-Z 


Fig.  154. — Daily  Statement. 

avoided.  In  the  larger  companies,  however,  the  names  are  usually 
printed  in  the  book,  and  the  short  leaves  are  then  unnecessary.  Figure 
153  shows  an  improved  form  of  daily  statement,  in  which  the  different 
accounts  are  grouped  according  to  classes,  and  the  totals  of  the  classes 
are  shown  in  red  ink.  The  resources  and  liabilities  are  grouped  sepa- 
rately, and  only  one  column  is  used  for  each  day's  work.  The  balances 
for  two  weeks  may  be  shown  on  each  double  page.  Other  forms  of 
statement  books  provide  an  extra  column  for  the  group  totals  shown  in 
Figure  153. 

Some  companies  have  each  day's  statement  written  on  a  separate 
sheet  of  paper,  the  sheets  being  filed  in  a  loose-leaf  holder.  Figure  154 
•shows  a  form  of  such  a  statement,  which  includes  also  a  memorandum  of 
accounts  opened  and  closed. 


FORMS  I  OR  RANKING  DEPARTMENT. 


289 


The  arrangement  of  the  details  of  the  statement  of  course  varies 
with  different  companies,  according  to  the  accounts  carried  and  the 
character  of  the  business.  For  example,  some  prefer  to  show  in  the 
general  statement  the  balances  in  each  of  the  depository  banks,  while 
others  show,  as  in  Figure  153,  simply  the  totals,  and  give  the  details  in 
a  separate  statement  devoted  to  the  reserve. 


Fig.  Ijj.— Boston-  Ledgkr  for  Gexerai,  .\ccoukts. 


These  three  books — the  journal,  the  ledger  and  the  statement  book — 
are  the  ones  included  in  what  is  sometimes  called  the  "three-book  system" 
of  keeping  general  accounts.  Instead  of  this,  some  companies  use  the 
"one-book  system" — the  one  book  being  a  modification  of  the  Boston 
Ledger.  A  form  of  such  a  ledger  is  shown  in  Figure  155.  As  a  study 
of  the  figure  will  show,  the  accounts  are  kept  in  this  Ixiok  in  practically 


290 


TRUST  COMPANIES. 


the  same  way  that  individual  accounts  are  kept  in  the  regular  Boston 
Ledger.  The  book  serves  for  both  journal  and  ledger,  the  entries  being 
made  directly  from  the  original  debit  and  credit  tickets.  Except  for  the 
convenience  of  the  officers,  a  separate  daily  balance  book  is  not  needed, 
as  the  balances  in  this  ledger  provide  a  daily  statement.  In  this  form, 
the  resources  are  grouped  at  the  top,  and  the  liabilities  at  the  bottom  of 
the  page,  so  that  only  one  balance  column  is  needed.  Some  prefer,  how- 
ever, to  have  two  balance  columns  side  by  side  for  debit  and  credit 
balances  respectively.  This  may  be  done  by  simply  adding  another 
balance  column  in  the  form  shown  in  Figure  155 — the  balance  of  the 
ruling  being  the  same.  Figure  156  shows  the  ruling  of  another  form 
having  wider  description  columns;  and  Figure  157  shows  a  form  with 
wide  description  columns  and  two  balance  columns.  In  both  of  these 
figures  the  ruling  for  one  day's  work  only  is  shown;  that  for  the  other 
dfijs  being  the  same. 


190 

J 

DEBIT 

CREDIT 

BALANCE  1 

DETAIL            1       AMOUNT 

AMOUNT 

DETAIL 

-r 

1 

■ 

t' 

1 

}— 

1 

1 

1 

■,- 

L_ 

_ 

J_ 

_ 

U-U 





1_ 

^ 

1 

Fig.  156. 


Debit  items 

Debits 

CsEoiT  Items 

Credits 

Resoubces 

LlAD.LITlES 

" 

*T 

-1 

- 

1 

_ 

_ 

^ 

- 

- 



— 

r 

- 

- 

- 

— 

- 

- 

*— 



— 

- 

- 

- 

- 

— 

An  evident  objection  to  this  method  of  keeping  the  general  accounts 
is  that  the  book  does  not  provide  much  space  for  the  description  of  items ; 
which,  for  some  accounts,  is  quite  necessary.  To  overcome  this  obstacle^ 
some  bookkeepers  use  an  auxiliary  book,  in  which  are  carried  in  detail 
those  accounts  whose  items  are  apt  to  need  much  description,  only  the 
totals  for  such  accounts  being  entered  in  the  regular  ledger  each  day.  It 
is  of  course  possible  to  do  away  entirely  with  the  description  columns  and 
use  the  book  strictly  as  a  ledger,  with  a  regular  journal  for  details. 

Entries  on  the  general  books  are  usually  made  from  debit  and  credit 
slips  which  are  furnished  to  the  general  bookkeeper  by  the  various  tel- 
lers, bookkeepers  and  officers.  Figures  158  and  159  show  forms  of  debit 
and  credit  slips  respectively.  Figure  l60  shows  a  combined  debit  and 
credit  slip,  which  is  convenient  when  both  debit  and  credit  go  to  the  same 
bookkeeper.  As  a  matter  of  convenience  in  filing,  it  is  well  to  have  all 
slips  of  this  character  of  the  same  size  and  shape;  although  some  prefer 
to  have  the  debit  slips  of  the  size  and  shape  of  the  company's  check,  and 
the  credit  slips  of  the  size  and  shape  of  the  deposit  ticket.     After  using. 


I-OIIMS    roi!    HANK1N(,    1  )l  I'A  IM  M  KN  T. 


291 


the  slips  should  hv  carefully  tiled  lor  tuturc  rffercucc,  as  they  are  the 
general  bookkeeper's  vouchers  for  entries  in  liis  books.  In  all  cases  the 
slips  should  be  sif^ned  or  initialed  by  the  person  responsible  for  the  trans- 
actions represented.  Theoretically  they  should  be  signed  or  "O.  K.'d  " 
by  an  officer;  but  this  is  ))ractically  impossible  in  a  large  institution. 
Charges  to  the  expense  account,  howevcl',  should  invariably  be  approved 
by  an  officer.  Many  companies  have  a  special  form  of  debit  slip  or 
voucher  for  petty  expense  items,  and  Figure  l6l  shows  a  form  of  such  a 
voucher.  I'etty  ex])eiise  items  are  of  tin  carried  by  the  paying  teller  in 
his  cash  until  tlic  close  of  the  week  or  month,  when  their  total  is  entered 


DEBIT. 


.>v3.je<:>vs<i-'>A_^  '^Qy<»-r'yy<!U_ 


j:^[a3rt^^>vJ^^_^d:?t^_ 


_MA_>L_A!tod^;::;:*vA^ 


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^1- 


vS  coo 
J  :ioQ 


Date- 


H 


:3-i_.. 


- 190  C^.      

Fig.  158. — Debit  Slip, 


^^..^<^  .^w^(3^. 


CREDIT. 


%u.xTl%,-i:ur.^^(bc..^t 


<uh  'U;,  .Utc         $1   J)a7|i^ 


Date^ 


^ 


.-^C" 


^\^^vvv<     <lc(<j^ 


l-"u;.  loO. —  Crkdit  Slip. 


on  the  general  books.  Instead  of  debit  and  credit  slips,  some  companies 
use  a  bound  book  known  as  the  charge  and  credit  book;  hut  while  this 
provides  a  permanent  record  of  such  items,  it  is  rather  too  cumbersome 
for  a  company  doing  a  large  business;  and  it  is  doubtful  whether  it  adds 
anything  in  the  way  of  safety. 

In  addition  to  the  regular  books  of  account,  the  general  bookkeeper 
prepares  or  gathers  from  the  heads  of  the  different  departments,  daily 
reports,  which,  with  the  general  statement,  arc  placed  each  morning  upon 
the  desk  of  the  executive  officer.  In  a  large  company,  these  include  re- 
ports from  all  the  various  departments — banking,  savings,  trust,  safe-de- 
posit, bond,  real  estate,  etc.     The  amount  of  detail  given  in  these  reports 


292 


TRUST  COMPANIES. 


varies  in  different  companies;  some  of  the  items  covered  being  lists  of 
accounts  opened  and  accounts  closed,  with  the  sources  of  the  former  and 
the  reasons  for  the  latter;  loans  made  and  paid;  overdrafts;  details  of 
the  reserve;  over  and  short  cash;  large  deposits  or  withdrawals ;  new 
trusts  received;  trusts  closed;  important  transactions  in  the  trust  depart- 
ment; investments  made  and  investments  sold;  purchases  and  sales  in  the 
bond  department;  safes  rented  and  safes  surrendered,  etc.  These  reports 
often  contain  a  comparison  with  the  figures  for  the  same  items  on  the  cor- 
responding date  of  the  previous  year.  Figure  l62  shows  a  portion  of  a 
daily  report  for  the  banking  department,  showing  a  list  of  new  accounts. 


CREDIT 


nicd:..^ti^Qu^^^^^j^^9lY 


(JL^rrzHayi^   -Lrr  cnxA^  aji£t   j/  A£CJu/\^^  dU^i^TxA-J^  x^^^/nv- 


^O  £_x£ 


Jbi  JAJr-     "tfyLvvyxji    c^'%\Ar^St-y^.^'i^         CJcCr.   i^^ir  CTTN-  i-< 


37  g" 


Ul(^,$^u^X^    Gr^^ 


Date 


^C.^    .f 


.190A 


Fig.  IfiO. — Debit  axd  Credit  Slip. 


EXPENSE  DEBIT. 


DISTRIBUTION 


(hjZ>^-\^ 


■S^U;^g^JLL<£4. 


FOB       1  0     (X-irSS 

XX              Gb^^ 

r 

4^cy 

Qu.-^^ 

< 

""^ 

DATE    ^^/06 

O.K..,    ^^-^P^,     ^^^^ 

neocivio  or  The  Star  Trust  conpanjr  »o«  rut  nnwoM  tPcoiFne  ••ovi. 

♦  Yv~~-  *'<"*  HERE. 

Fig.  161. — Petty  Expexse  Voucher. 


O^C^Hc^rri  ^:knr^Ji^^<2j^^ 


Monthly,  semi-annual  and  annual  reports  are  also  compiled,  these 
usually  including  comparative  statements  to  show  the  growth  of  the  com- 
pany month  by  month  or  year  by  year.  The  general  purpose  of  such  re- 
ports is  to  enable  the  executive  officers — who  naturally  have  little  time  for 
details — to  quickly  inform  themselves  of  the  condition  and  the  trend  of 
the  business. 

The  Loan  Department. 

There  is  considerable  difference  among  trust  companies,  as  among 
banks,  in  the  manner  of  handling  the  details  connected  with  the  mak- 


FORMS  I'OK  BANKING  UKPAHTMENT. 


293 


ing  of  loans.  The  iiuthods  vary  with  the  size  of  tlie  couipany,  the 
charactiT  of  the;  business  and  the  preferences  of  tlie  officers.  In  some 
companivS  all  the  details,  including  the  keeping  of  the  records,  are 
attended  to  by  the  loan  clerk  and  his  assistants;  while  in  others  nuieh 
of  the  detail,  as  to  records  especially,  is  handed  over  to  other  workers. 
Often  the  loan  clerk  keeps  no  journal,  all  the  loan  items  being  detailed 
in  the  general  journal  from  debit  and  credit  slips  which  the  loan  clerk 
hands  to  the  general  bookkeeper.  In  some  companies  the  loan  clerk 
keeps  a  cash  drawer  and  issues  official  checks,  paying  out  the  proceeds 
of  loans  directly;  while  in  others  cash  payments  are  made  by  the  paying 
teller,  and  checks  are  issued  by  the  draft  teller  or  other  employee.  The 
records  here  described  are  such  as  are  used  in  cases  where  all  the  details 
connected  with  loans  are  attended  to  in  the  loan  department. 


us^ 


s... 

Cc>iuit^i>i. 

s...... 

C„„.,c.-,.. 

so,... 

"" 

^J7     ,f^C2za. 

^.TO 

Uri^  S 

V 

d[U<^^a.s^yH&^ 

/f(,i-  "hUju.  CU 

/ 

Ottf> 

aji 

S-uu^^.^'TU.^'K..^ 

s*h.V^^X0i4^ 

Ton 

Jk!t^. 

CUiJ.^   Qhnru^r^ 

3.I^S.-*^(&tX, 

?!'? 

(,^ 

^Cx^co.^ 

■ 

r^ 

(M.^  ^^rL'Jh 

ZT       .-75^^ 

TuifxS. 

>" 

I'u;.   Ki 


I'oKTiox  oi    Daily  RKrour. 


The  loan  teller's  proof,  being  arranged  according  to  the  same  princi- 
ple as  that  of  the  jjroofs  already  described.''  need  not  be  reproduced 
here. 

A  number  of  styles  of  loan  journal  are  in  use,  probably  the  most 
common  style  being  one  having  several  columns  for  the  different  classes 
of  loans  handled,  and  one  or  more  columns  for  interest  items.  Figure 
163  shows  a  form  of  such  a  journal.  In  this  form  the  interest  on  the 
different  classes  of  loans  is  shown  separately.  Other  forms  have  only 
one  column  for  interest.  The  columns  headed  "Accrued  Interest"  are 
for  the  entry  of  interest  items  accruing  at  the  regular  interest  periods; 
it  being  the  practice  of  some  companies  to  charge  the  total  interest  ac- 
cruing at  such  periods  to  an  account  in  the  general  ledger  entitled  "Ac- 
crued Interest,"  and  to  credit  it  at  once  to  earnings.     Payments  of  such 


74  See   Figures   124-Ii 


294 


TRUST   COMPANIES. 


1-    ■ 

.-! 

5 

?  ? 

%         ^     : 

"^ 

51   ±  "  :    : 

" 

* 

J    ; 

^       ^ 

i 

o- 

l                         ;  - 

-. 

' 

,         -     --,-       - 

:   ' 

1                                 c 

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^  s 

1          1       J 

_:      1- 

11 1 0  r ' 

:; 

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11 

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r,-C. 

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I 


-Brf* 

^-x^^ 

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^ 

A-^{ gm*HO  '•o^w 

7; 

.     ,.■'.,                                 -...•<'  )n 

cJ'//;a    -,-^uci    «c{ .                                      ■■■     -r 

ivnacsT 

u^n 

«T»Kirr» 

MKMMT 

MS 

mmmr 

;  on  ^' 

A«M«r 

■•uww 

'VJr^ 

1^ 

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f-<r 

xT 

^ 

OMf/ 

:=> 

QQ<r, 

^ 

or,. 

iu**. 

„ 

"h  •• 

,^ 

'■'7 

Orf 

^ 

.^:^o 

'a/ 

%.^ 

f'T 

'■^7 

Tn 

Afr 

li^ 

/ 

f3n,T 

..:     ,' 

,,. 

.f  :^ 

^G 

I- 

U-  -» 

J- 

.^ 

l.«- 

I  —  . 

Fig.   164. — F.\ce  or  Card  Lkikikr  kor   Dkmasd  Loans. 


I'=« 

ocscBimoM  or  collattral 

t    , 

2 

1     " 

^^      01    H"^^^&^>-to      r^^l.  2r,.  A  ■^,         ^-'-*     ^'-^                                        -    «-'- 

,  -  I 

-, 

/o ^^^jD^^ri.r:^^^ '  v-.ji. 

^^^     -1 

! 

t           1 

; 

1 

[ 

1 

1 

Fio.  165. — Back  of  Caed  Ledger  fob  Demakd  Loans. 


296 


TRUST  COMPANIES. 


interest  are  then  credited  to  accrued  interest  as  received;  and  the  balance 
against  this  account  at  any  time  shows  the  amount  of  past-due  interest. 
This  plan  insures  that  interest  shall  be  placed  to  the  credit  of  earnings 
during  the  period  in  which  it  is  earned,  and  it  also  serves  as  a  safeguard 
against  overlooking  any  past-due  items  of  interest.  The  totals  of  the 
different  columns  in  this  journal  are  handed  to  the  general  bookkeeper 
on  debit  and  credit  slips  at  the  close  of  each  day's  business. 

Substitution  of  Collateral. 


PittBbUrg,  ?&,.^iJx.  7     190 6 


The  mcersigned  acknowledges  that  he  has  this  day  r<ei>elved  Trom  the 
Blank  Trust  company  the  following  securities  held  aa  collateral  to 


xoans- 


^5"o-o-o 


And  that  he  has  deposited  in  lieu  therof ,  subject  to  the  same  condi- 
tions as  the  collateral  originally  pledged, 


^^^uH>.  Glxi.oaxL^^.(?cu^j  ^%  U^. 


^icr<n^ 


Fig.  166. — Forji  for  Substitution^  of  Collateral. 


&L.La.^  ^1.    iOc 


TIME    LOAN 


yrri-- 


P-TM-3    Sji^-^st^  >&<-. 


MEMO. 

R«T 

rlr 

'Yr 

1-     ,    -,  II 

ceteaimoa 

lOTC 

l»TI 

out 

O.TC 

OEIIT 

S.L»C[ 

W^ 

n  [crr{^>lit^UUln.dl^  l.i<k  >rs 

lis 

%, 

X 

'1^^ 

-, 

-^ 

oU 

^ 

^-sr 

'f 

7.Vr 

ie-<«) 

■?LrS    /3KCili<fn    liijJ(  m^i  /■fac?- 

ko 

'bH 

% 

%, 

^. 

fit 

foo 

^ 

7s;o 

? 

^O 

, 

- 

../. 

..- 

.,..^.^ 

-t.-S. 

.«..,. 

Fig.   167. — Face  of  Card  Ledger  for  Time  Loaks. 


FORMS  FOR  BANKING  DEPARTMENT. 


29/ 


Cards  are  quite  generally  used  for  loan  ledgers.  Figure  l6i  shows^ 
the  face,  and  Figure  165  the  back,  of  such  a  card  ledger  for  demand 
loans.  As  a  study  of  the  figures  will  show,  the  loan  account  and  the 
interest  record  are  kept  on  the  face  of  the  card,  the  back  being  devoted 


INTEREST     RECORD 


TO 

..,0 

TO 

AMOUNT 

....      1 

L 

3  o4 

C3 

7-^ 

3   ST 

o6 

k 

2- 

oL. 

3  6. 

6    3 

0^ 

1 

1 

1 

i 

^ 

— 

COLLATERAL     SURRENDERED 

THI    UNOCRSICNCO    AC  K  NOWLI OC  t'S    BtCtirr    OH    THT    0*TCS     MrNTIONCO. 

or    THC    SCCURITICS    DCSCRIBCD    aCLOW. 


{* 

;\ 

0^ 

2'^%v^v6<;.(^   \^S\. 

C^.-hA.Uv.^ 

IL    SCCUKITItt     AND     OTHCR 

■  ign  bclow 
clcvelano.  o 

Fig.  1()8.— Back  ok  Card  Ledger  fob  Time  Loans. 


kPCKS     D\H 


298 


TRUST   COMPANIES. 


to  a  description  of  the  collateral,  and  to  the  receipt  which  is  taken  when 
collateral  is  delivered.  The  receipt  on  the  card  is  more  convenient  than 
a  separate  receipt,  as  it  insures  that  everything  in  the  way  of  record  of 
closed-out  loans  shall  be  filed  together.  With  some  loans,  however,  and 
particularly  with  those  of  brokers,  the  changes  of  collateral  are  so  many 
that  there  is  not  room  on  the  loan  card  for  the  various  receipts.  For 
such  cases  it  is  convenient  to  have  a  separate  form  for  the  substitution 
of  collateral,  such  as  is  shown  in  Figure  l66.  The  separate  receipt  is 
useful  also  in  the  numerous  cases  where  the  owner  of  the  collateral  does 
not  come  for  it  in  person,  but  sends  a  messenger. 


^„9l£^t^^(Lcfc^* 

^S^JU^yjgi. 

^o?c^  i 

_^... ^ Co...r....u..L..ce. 

** 

/"- 

,"'."„ 

•<"•<■''" 

h^ 

r£^ 

..,„^.. 

~'r^ 

i;^ 

...,„ 

—.t::;-.-! 

,.. 

ruij 

.<r 

3/<(-T 

a,.^..<LS._rf 

,. 

... 

3 

r^-^f, 

j-r 

9t^tl^  C&r,^. 

,^ 

c- 

^ 

%A.^ 

,^ 

■s 

^ 

a.vt/.^©,^.^ 

Va^ 

(^ 

.^ 

IS- 

_ 

Fig.  169. — Collateral  Like  Ledger. 

Figure  l67  shows  the  face,  and  Figure  l68  the  back,  of  a  card  ledger 
for  time  loans.  In  this  form  the  loan  account  and  the  description  of 
collateral  are  given  on  the  face  of  the  card,  the  interest  record  and  the 
receipt  being  on  the  back.  These  ledger  forms  may  easily  be  adapted 
to  permanently-bound  or  loose-leaf  books  if  desired. 

It  is  important  to  know  at  all  times  the  amount  of  loans  carried  on 
each  kind  of  collateral,  to  avoid  loaning  too  heavily  on  any  securities, 


^yisi^%A:(^a^yd'r^,'<^il^^JU^   (^Lf^C^.O?.©. 


^^ 


,o.«wt. 

i,"". 

" 

Ko. 

AMOUNT 

NO 

OUNT 

■« 

.MOUNT            1 

.<-c 

\^^...S^,t£ 

,^ 

2.S- 

3 

Jt.  to 

:6 

^^^C^«-ww 

/xn 

^-O' 

ajac 

is- 

9 

ooo 

^l£ 

J^en.  '^'^  (Rtn. 

loo 

.ST5 

,<; 

oo(i 

fl.V 

IH 

OCiL 

.rts 

CiXiX^^^   (J^-ns-LArrU 

{■> 

nop 

7.r 

-^or^ 

Z-^' 

n 

n 

....... 

..... 

.. 

Fig.  170. — Collateral  Line  Ledger. 


FORMS  FOR  BANKING  DFRARTMENT. 


299 


and  for  reference  in  case  loans  must  be  called  because  of  decline  of 
collateral.  For  this  purpose  a  collateral  line  ledger  is  used,  of  which  a 
loose-leaf  form  is  shown  in  Figure  l69,  and  a  card  form  in  Figure  170. 
The  figures  are  self-explanatory.  Figure  171  shows  a  card  used  for 
a  collateral  line  ledger  on  a  dift'erent  plan.  An  index  card  is  provided 
for  each  kind  of  collateral,  and  behind  each  index  card  are  filed  the 
cards  like  that  shown  in  Figure  171,  a  separate  card  being  used  for  each 
loan.  When  a  loan  is  paid,  or  other  collateral  substituted,  the  old  card 
is  removed  from  the  file  and  destroyed.  To  get  the  total  of  any  given 
collateral  held,  or  the  amount  of  loans  on  same,  it  is  necessary  to  add 
tlie  amounts  on  the  several  cards  that  may  be  filed  after  the  index  card. 


p^ 

.».          ||              .T 

II 

n 

oL 

^O          !   I20 

^3(41 

i> 

ooo 

— 

bi 

^.^^C(^ 

'vOtrOL^ 

-sif^.O^. 

,«:6»-c 

t 



j 

— 

Fig.  171. — Coi.i.ATEn.M,  Line  I^edger  Card. 

Figure  172  shows  a  form  of  collateral  note  used  in  New  York  city. 
A  shorter  form,  used  in  a  large  city  in  the  Central  States,  reads  as  fol- 
lows: 

% CINCINNATI.     0 190 

On    demand   after   date promise  to  pay   to  the  order  of 

THE     BLANK     TRUST     COMPANY  at    its    office 

DOLLARS, 

for  value  received,  with  interest  at  the  rate  of per  cent,  per  an- 
num, payable  quarterly  on  the  15th  days  of  March,  June,  September 
and  December  of  each  year,  unpaid  installments  of  Interest  to  draw 
Interest  at  the  same  rate  as  the  principal,  having  deoosited  with  said 
Company  as  collateral  security  for  payment  of  this  or  any  other  liabili- 
ty  or  liabilities  of to  said   Company,  due  or  to  become  due,  or  that 

may  be   hereafter  contracted,  the  following    property,    viz.: 


The  market  value  of  which  Is  now  $ ;   with    the   right    to  call  for 

additional  secur'ty  should  the  samo  docline;  and  on  failure  to  respond, 
this  obligation  shall  be  deemed  to  be  due  and  payable  on  demand,  with 
full  power  and  authority  to  sell  and  assign  and  deliver  the  whole  of 
said  property,  or  any  part  thereof,  or  any  subst'tutes  th.refor.  or  any 
additions  thereto,  at  juiblic  or  private  sale,  at  the  option  of  said  Com- 
pany, or  its  assigns,  and  with  the  right  to  be  purchasers  themselves 
at  public  sale,  on  tho  non-performance  of  this  prom'se  or  the  non- 
payment of  any  of  the  liabilities  above  mentioned,  or  at  any  time  or 
times  thereafter,  without  advertisement  or  notice,  and  after  deducting 
all  legal  and  other  ca-^ts  and  expenses  for  collect'on,  sale  and  delivery, 
to  applv  the  residue  of  the  proceeds  of  such  sale  or  sales  so  to  be 
made,  to  pay  any.  -ither  or  all  of  sai.l  liabilities,  as  said  Company,  or 
its  president  or  treasurer  shall  deem  proper,  returning  the  overplus  to 
the  undersigned. 

No 


Address. 


300 


TRUST   COMPANIES. 


This  form,  providing  as  it  does  for  quarterly  payments  of  interest 
on  a  demand  note,  illustrates  the  custom  in  some  localities  of  carrying 
demand  loans  for  several  months  or  even  years,  so  long  as  the  collateral 
does  not  decline  in  value  to  a  point  which  makes  the  margin  too  small. 
Jt  is  evident  that  this  is  quite  different  from  the  "call"  loan  as  usually 
carried  in  New  York  city. 


3U£L^ 


nvS- 


pay  the  CauUMB 
York,  etCvejL 
with  interest  at  the  rate 
as 'collateral  security  for 


"S^i-o-o 


oi.,>^.S/\'^:rrrr:..ftl  Cen 

r  the  payment  ot  this,  and 


^...after  date,  for  value  received,  the  undersigned  promise    to 
.  or  order,  at  the  office  of  said  Company,  26  Nassau  Street,  City  of  New 

— -N--:— . --T-,-_-r7S,--=>,,,-:r:!^._Dollars  {t^OOrO^ _,. ) 

turn  ( 5SZI_V)  pef  annum,  having  deposited  with  said  Trust  Company 

for  all  other  prcMnt  and  future  demands  of  the  holder  hereof  against  the 


a©  /»-^ 


tO^<J^.  f^,  "lA^s^&t'^^^A^^^J^ 


and  hereby  empower  the  holder  hereof,  on  non-performance  of  any  obligations  herem  contained  to  sell,  withuut  notice 
and  without  demand  of  payment,  the  whole  or  any  pari  of  said  securities  and  substitutes  therefor  and  additions  thereto,  at  any 
brokers'  board  or  at  public  or  private  sale,  within  or  without  the  City  of  New  York,  at  the  option  of  the  holder  hereof,  and  after 
deducting  all  legal  charges,  expenses  of  said  sale  and  collection  of  this  note,  to  apply  the  proceeds  to  the  payment  of  the  principal 
and  interest  of  this  note,  and  other  demands  against  the  undersigned  aforesaid,  accounting  to  the  undersigned  for  the  surplus, 
if  any.  'n  case  of  deficiency  alter  sale  and  application  of  proceeds,  the  undersigned  agree  to  pay  the  amount  thereof,  with  legal 
interest 

In  case  of  depreciation  in  the  market  value  of  the  property  held  as  collateral  <o  this  loan,  or  in  case  any  of  the  collateral 
securing  this  loan  shall  be  unsatisfactory  in  amount  or  otherwise  to  the  holder,  the  undersigned  will  forthwith  make  such  payment 
of  principal  and  interest,  or  deposit  such  additional  securities  as  collateral  hereto,  as  may  be  required  and  approved  by  the  holder 
hereof.  In  case  such  payment  shall  not  be  made,  or  securities  deposited  as  aforesaid,  this  note  shall,  at  the  optk)n  of  the  holder, 
become  immediately  due  and  payable,  and  the  collateral  deposited,  as  aforesaid,  may  be  forthwith  sold  and  the  proceeds  thereof 
applied  as  hereinbefore  provided,  the  undersigned  contracting  and  agreeing  forthwith  to  pay  the  holder  any  deficiency,  with  legal 
interest  thereon.  On  sale  of  any  of  said  collateral  the  holder  may  purchase  and  hold  the  same,  free  from  any  claim  of  the  under- 
signed, applying  the  amount  of  the  purchase  price  in  the  liquidating  or  reducing  the  indebtedness. ,  The  collateral  herein 
mentioned,  and  any  securities  which  shall  be  either  added  to  or  substituted  therefor  and  the  proceeds  thereof,  shall  also  be  held 
and  treated  as  collateral  security  for  any  and  all  other  debts  or  claims  (absolute  or  contingent,  due  or  to  grow  due),  held  against 
the  undersigned  by  said  Trust  Company  at  any  time,  and  shall  be  subject  to  sale  upon  non-performance  of  any  obligation  thereby 
imposed  and  to  all  the  conditions  and  agreements  herein  contained. 

Any  delay  on  the  part  of  the  holder  hereof  in  exercising  any  rights  hereunder  shall  not  operate  as  a  waiver  of  said  rights. 

If  the  undersigned  shall  become  insolvent,  make  a  general  assignment  for  the  benefit  of  creditors  or  file  a  voluntary  petition 
in  bankruptcy,  or  if  a  petition  in  bankruptcy  be  filtfd  against  the  undersigned,  then  this  note  shall  be  forthwith  due  and  payable, 
and  in  any  such  event  all  property  of  the  undersigned  in  the  possession  or  under  the  control  of  the  Trust  Company  shall  be 
collateral  security  hereunder 


lOl.Lc^^-d?  <^ 


Fig.   17;;?. — Collateral   Xote, 


A  power  of  attorney  for  the  transfer  of  stock  is  printed  on  the  back 
of  each  stock  certificate;  a  customary  form  of  such  a  power  being  as- 
follows : 


For  value   received hereby  sell,   assign  and  transfer  unto 

shares  of  the  capital  stock  represented    by   the    within    certificate, 

and  do  hereby  irrevocably  constitute  and  appoint at- 
torney to  transfer  the  said  stock  on  the  books  of  the  within-named, 
company,  .with  full  power  of  substitution   in  the   premises. 

Dated 190 

In  presence  of  " 


For  various  reasons,  however,  borrowers  often  prefer  to  sign  a 
separate  power  of  attorney,  and  a  form  for  same  is  shown  in  Figure 
173. 


FORMS  FOR   BANKING  DEPARTMENT.  301 

In  cases  where  loans  are  made  to  corporations,  it  is  necessary  to  have 
evidence  of  the  authority  of  the  officers  of  tlie  corporation  to  hypothecate 


TRANttFER   OF  OTOCK. 


iru.  «..<!  Lwlxl  .Itor...,.  lrr.«o<>.t>l.  tor      ^X*-^ ...d  In ^li^i^ n.o..  ...d    .I..<1         !•»<   .o    'K^ 

o,or.  •-yy  ■-  -"—"<>'-  ~"'>  '■•"  '"»  i~w.r.  r..«t., 

]"'lO.    173.  —  POWKK    OF    AllORXEV    FOR    TllAXSKER    OF    StOCK. 

its  securities.  For  this  purpose  a  copy  of  tlie  resolution  of  the  board 
of  directors  of  the  corporation  authorizing  sueli  hypotliecation  is  re- 
quired, a  form  for  which  is  as  follows: 

COPY    OF     RESOLUTION. 

At  a  regular  meeting  of  the  Board  of  Directors  of  the 

Company     of held  on     the 

day  of A.  D.,  190 the   following   resolutions    were   un- 
animously   adopted: 

RESOTjVED,  that  the  president,  vice-piesident.  secretary  or  treas- 
urer of  this  company  are,  and  each  of  them  is  heri  by  authoiized  and 
empowered  to  borrow  on  behalf  of  this  company  from  the  Blank  Trust 
Company  from  time  to  time,  such  sums  of  money  as  such  olhcers  or 
either  of  thorn  may  deem  expedient,  not  exceeding  in  the  aggregate  at 
any  one  time  the  sum  of dollars,  on  such  terms  and  condi- 
tions as  such  officer  so  acting  hereunder  may  approve,  and  to  pledge  as 
security  for  the  re-payment  of  each  of  such  loans  si'.ch  securities  or  as- 
sets of  this  company  as  may  be  reriuiied,  and  agreed  upon  between 
such  officers  and  the  Blank  Trust  Cumpany,  and  to  give  this  rompaTiy's 
obligation  or  obligations  in  ev'dcnce  thereof,  and  from  time  to  time 
when  any  obligation  evidencing  any  of  such  loans  matures,  to  renew 
the   loan   in   whole   or  m  part   until   the   same   is    paid    In   full;   .and    that 

•  each  of  such  officers  is  also  authoriz  d   to  borrow  money  from  the  Blank 
Trust   Company   on  behalf  of  this   Company,    from    time    to    time    by    re- 

.  discounting  with  said  Blank  Trust  Company  any  of  the  bills  receivable 
held  by  this  company,  not  exceedinir  in  the  aggr.gate  at  any  one  time 
the  sum  of dollars,  on  such  terms  as  such  officer  may  ap- 
prove; and  the  Blank  Trust  Company  may.  at  any  time,  apply  any 
money  or  property  in  its  hands  belong'ng  to  this  company  to  the  pay- 
ment of  any  indebtedness  of  this  company  to  it.  whether  due  or  not. 
RESOLVED  FURTHER,   that  a  cr>rtincd  copy  of  these  resolutions  be 

-sent  to   said   the  Blank  Trust  Company,  and    that    thvy  shall   remain   in 
full  foice  until  written  notice  of  their    repeal    shall   have    been    g'ven    to 
the   Blank   Trust  Company,  and   imtll   all    indebtedness   which  may  have 
been   incurred   as   aforesaid   shall   have  been   fullv  paid  and   satisfied. 
THIS  IS  TO   CERTIFY,   that  the  foregoing  Is  a  correct  copy  of  the 

record  of  a  meeting  of  the  Board  of  Directors    of   the Company. 

of held   in  said  city  on  the day  of A.   D..    190 


(.Affix  seal  of  company  here.) 


The  officer  certifying  the  cpt>y  of  resolutions  should  be  other  than 
the  officer  on  whom  the  resolution  confers  power  to  borrow  the  money. 

It  sometimes   happens  that  a  person  wislies   to  get  a  loan  on  securi- 
:tics  uhjch.ire  in  his  possession,  and  .ire  jiroperly  endorsed   for  transfer, 


302 


TRUST   COMPANIES. 


but  are  not  his  personal  property.  In  such  cases,  it  is  best  to  have  from- 
the  owner  of  the  securities  a  certificate  showing  that  the  other  person  has 
authority  to  pledge  them  as  collateral.  A  form  used  for  this  purpose  is 
as  follows: 

AUTHORITY    TO     HYPOTHECATE    SECURITIES. 

Buffalo,  N.  Y.,  Aug.  5,  1906. 
To   the   Blank  Trust   Company. 

THIS  IS  TO  CERTIFY,  That  John  Jones  is  hereby  authorized  to 
hypothecate  foi-  his  own  account  or  otherwise,  100  shares  of  The  Lake 
Shore  and  Michigan  Southern  Ry.  Co.  stock  standing  in  my  name,  as 
security  for  any  loan  or  loans  made  by  the  Blank  Trust  Company  to 
him  or  for  any  other  indebtedness  of  his  to  said  Trust  Company,  and  to 
receive  said  security  upon  payment  of  such  loan  or  indebtedness.  This 
authority  is  good  until  revoked   by  me    in    writing. 

MARY  R.  JONES. 
Witness:     Wm.  Smith. 

For  the  safe-keeping  of  the  notes  and  collateral,  loan  envelopes  are 
provided,  made  of  manila  paper  or  of  strong  paper  re-enforced  with 
cloth,  and  having  printed  on  the  face  memoranda  regarding  the  con- 
tents.    Figure  174"  shows  the  face  of  such  an  envelope.     These  envelopes - 


(Oa^i-OH/7U.>.r^. 


^j^t\o(o 


DEMAND  COLLATERAL  LOAN  No.-.2ii! 
—  AMOUNT  >3(Mlf)r 


XU   (^.•fO.'!l.C\r>JU.              %-IHO. 

3/.*^  •>l.f  (?.M.d^.  oL 

IIST). 

lou  <pw..^(p.(s.a.. 

1 

. 

Fig.  174. — Face  of  Collateral  Loax  Envelope. 


are  filed  alphabetically  in  the  drawers  of  a  cabinet  which  is  kept  in  the 
vault.  A  convenient  arrangement  is  to  have  this  cabinet  made  of  metal 
and  mounted  on  trucks,  so  that  it  may  be  placed  in  the  loan  cage  during 
business  hours.  On  each  envelope,  as  the  figure  shows,  are  recorded  the 
name  of  the  borrower,  the  date,  number  and  amount  of  the  loan,  and  a 
list  of  the  collateral;  the  plan  involving  the  use  of  a  separate  envelope 
for  each  loan,  even  when  there  are  several  loans  to  one  person.  Some 
companies,  however,  keep  the  collateral  of  all  the  loans  of  each  customer 
in  one  package,  using  expansible  wallets  wliich  will  contain  a  considera- 
ble number  of  papers.  In  cases  where  the  collateral  consists  of  a  number 
of  bonds  too  large  to  be  placed  in  an  envelope  or  wallet,  the  bonds  are 
kept  in  a  specially  prepared  place  in  the  vault,  and  a  memorandum  of 
same  is  placed  in  the  loan  envelope.  In  some  companies  all  collateral 
for  loans  is  kept  always  in  the  vault  under  joint  control  of  two  officers, 
or  of  an  officer  and  the  loan  clerk,  or  of  one  of  these  and  the  auditor  or 
one  of  his  force. 


FORMS  FOR  BANKING  DEPARTMENT. 


30tX 


Somt-  companies  do  not  file  the  notes  with  the  collateral,  but  keep 
all  notes  together  in  a  wallet,  for  greater  convenience  in  endorsing  interest 
and   payments. 

Instead  of,  or  in  addition  to,  keeping^  a  record  of  loans  and  collateral 
on  the  same  cards  or  sheets,  as  indicated  on  the  records  above  described, 
some  companies  keep  a  record  of  the  collateral  in  a  separate  book  known 
as  the  collateral  register,  a  form  of  which  is  shown  in  Figure  175.  Of 
this  record  one  page  (or  more  if  needed)  is  used  for  each  borrower. 
Another  form  of  this  record  is  shown  in  Figure  176.  A  third  form 
contains  space  for  the  record  of  collateral  of  loans  to  different  customer* 
in  consecutive  order  as  the  loans  are  made.     Space  is  left  after  the  list 


— 

.. 

,..«. 

.»„, 

'~ 

cow....... 

«, 

,iZ~ 

•:::=-- 

_, 

r,; 

A;^«» 

/■*t-C^1^(ft,  Y^  /;*^-v*/.<M 

a 

n,'- 

, 

Ss- 

3*'A...^/%<-\t.<f  A.(^>'2„«  =..^ 

f^- 

:iSiiOk£  Irf  .<  "?■  "(!J   cd'u-     -i-ic. 

1 

FlG. 


-COI.T.ATKRAL   REGISTER. 


as-^ptt- 


.  ■/ 

\mr 

LOAN 

>^y    COLLATKPAL 

VALUE 

DCTOSITOR'S    mcbif: 

kd 

_^ 

,<7 

rnr 

/<?«-Qnd/^c*^  ^{^  l^ck.^,3n<l 

, 

IfrC 

U^.^*RS^ti;^,>.:..h 

3'hi-Aiy.,ry^'^Lif    f^'ii=^^l,t-^IX^ 

3 

OOO 

5.CW  (}H./d^K^  ^S^*  ^/Jf<^^-  "-* 

■^ 

^^•^ 

1 

.   1 

1 

.L_ 

Fig.  176. — Coi.lait.rai.  Register. 

of  coUateral  of  each  loan  for  possible  changes  in  collateral;  but  on  this 
form  it  is  not  possible  to  group  together  all  the  collaterals  of  each 
customer. 

Some  companies  keep  a  ''Loan  Accession  Book,"  which  is  a  register 
of  collateral  loans  in  the  order  in  which  they  are  received,  being  similar 
in  principle  to  a  register  of  bills  discounted,  a  form  of  which  is  shown 
in  figure  \9\.  Spaces  are  provided  for  the  date,  name  of  borrower,  due- 
date,  rate,  amount  and  list  of  collateral. 


Real  Estate  Mortgage  Lo.\ns. 

Applicants    for    loans    to    be    secured    by    mortgages    on    real    estate 
irc   required  to  fill  out  application   blanks   giving  particulars   regarding 


S04  TRUST  COMPANIES. 

the  property  to  be  mortgaged.  This  information  is  primarily  for 
the  purpose  of  enabling  the  company  to  locate  and  appraise  the  prop- 
erty; and  secondarily  to  bring  to  light  any  facts  that  might  aid  in 
forming  an  estimate  of  the  desirability  of  the  loan.  Often  the  appli- 
cation itself  shows  that  the  loan  would  not  be  a  desirable  one,  and  the 
company  is  saved  the  trouble  and  expense  of  making  an  appraisal.  The 
amount  of  information  called  for  on  the  blank  varies  considerably  with 
different  companies.  Sometimes  the  applicant  is  required  to  sign  a 
formal  order  authorizing  the  company  to  make  or  procure  a  loan,  and 
agreeing  to  pay  all  expenses  incurred  should  the  loan  be  declined.  Other 
companies  prefer  to  have  an  officer  fill  out  the  blank  from  verbal  infor- 
mation given  by  the  applicant,  because  the  personal  interview  often 
brings  out  important  information  that  would  not  be  shown  in  a  written 
application.  Figure  177  shows  a  short  form  of  application  blank.  This 
is  printed  on  card-board;  and  after  the  property  has  been  appraised  the 

SI,..!      -yp'r^AX' N..  3>f7     M-^toM      ^S'O     F«tF,.nlX    /  7^     P..1  D». Uf-tiJ  SIJ.  ol  r.!n/l 

B5«-J-»-5 

RCAL  ESTATE  LOAN  APPUCATION  "  " 


APPUCANT'S  ESTJMATE 


tiiZ-^O^r B^  6*^  n-.    Ayr. n...  ^A V"  ^    "•'■" ""--^ * ^^ tx^ 


Pmrlptlon  o(  BulldlJO    1  JtliTWt.^ 


/iLcb''-^^  J^rjM^^ V1«o(Bkl'oS^3.(>tO, 


■^>^0(K>; 


»,t-U.N..     Ig-g Sub.Dlvl.|«.       CR^r^.    ^JtyrS^ Ori..U.N..    /Af 


¥i 


S^jci  n^^^^oC,  ntr  ^'^°i'f 


1U/;y\.IK. 


B.^.    ()>^Wba^^>^     OU-^ViaJ?.  rL^  r^wvA 


Fig.   177. — Real  Estate  Loan  Application  Cakd. 

cards  are  filed  alphabetically  by  names  of  streets.  In  time  these  card- 
files become  valuable  sources  of  information  as  to  property  values  in  the 
various  localities  in  which  the  company  makes  such  loans.  On  the  back 
of  the  card  is  shown  a  plat  of  the  property  and  any  remarks  the  ap- 
praisers see  fit  to  record. 

Figure  178  shows  a  longer  form  of  application  blank,  this  being 
printed  on  a  sheet  of  paper  14  by  8%  inches  in  size. 

After  the  appraisers  have  made  their  report,  the  application  goes 
before  the  finance  committee  for  approval  or  rejection;  and,  if  ap- 
proved, the  papers  are  signed  and  acknowledged,  and  the  mortgage  put 
on  record.  The  abstract  is  then  ordered  extended  to  include  the  mort- 
gage, and  is  examined  and  approved  by  the  company's  attorney  before 
the  proceeds  of  the  loan  are  paid  to  the  borrower.  If  the  examination 
shows  an  unsatisfactory  title,  the  loan  is  not  made,  and  the  mortgage  is 
cancelled  of  record.  If  prior  liens  are  shown,  these  must  of  course  be 
removed  before  the  loan  is  made. 


FORMS  FOR  BANKING  DEPARTMENT.  305 

SECURITY  TRUST  COMPANY, 

N.  E.  Cor.  Third  and  Market  Streets,  Camden,  N.  J. 

Teltfhoo.  3*2.  _____^______^^___^ 

\J_hereby  aulhorij^  the  SECURITY   TRUST   COMPANY,    of   Camden,    lo  procurf/or   "^^^Ji^ 

a    loan   of  ^fO-gxP-^.A^a.'iv^ Dollars  lXCKrO"r for     -J^rt\^,^  y.,a,,  m    6 

per  cent,  interest  per  annum,  payable  semi  annually,  on  mortgage  on  Ike  follozving  described  property  and 

\7      agree  to  have  all  necessary  legal  papers  prepared  and  recorded  al.^l<^_own  cost,  and  should  title 

prove  defective,  or  application  bewilhdraivn  after  papers  are  begun  -^^^agreclapay  for  all  expenses  incurred. 

^Jd^^f^y^ .  occ„p.tio„.<fi^-tv,^i2i 

Loctioo  ot(Pro^y-t  ^^^      ^/^^l=M-^    ^l^ ■ 

DimrnsioDi  of  Groandt    ^"^  A — I  ^  Q^  J^      /i7 — i TTfl ^ A      t ' 

D«cnpUoo  of    BoiMing.      ^     ^<7V^      fecJ^    gttW^^jg^  ,   "''^^  ^>iy^W^  ,-^M^.f^^_ 

. pracnt  condilion— >t32::^a=: when  K-iit  IS'J  I 

Vilur  of  Crouod  (Mclujivf  of  Buildings)  present  worth  in  C««h %    I  ^f-O'^ . 

Value  of  BuildiDgj(e«lusiTe  of  Ground)  present  worth  in  Cash |     H'^'O-Q  . 

If  offered  At  Public  Sale  now  I  believe  this  property  would  bring  at  leut. |     tj-0-0~O  . 

Occupied  ai_CU..ii^->/\X*-V^ . Insu  ed  for  i30-»g^ 

Annual  Rent  at  — ■= — Assessed  Valua  t/<S^t)-0.^ 

any  way ? f  \^\ 


f/;^sS^uf::: 


7.  (^0(0, 


'ayK^jUL.AjO<  .    L}dd>i^y 


V^O^-^C:^^J:^\.    CLu-. 


We  have  examined  the  above  described  property  of 
located  in    :fcK^      CJaT"    O^    L(2L.^.J-— .~         Tniihtv 


Oy.  CjQ:fez^> 


o^^^Jl.. 


IM-»-vJ-  Jil-^\A-B^ and  of  which  the  foregoing  is  a  just  and  fair  description,  and  are  of  the  opinion  that 

said  profwAy  ii  worth  at  Irmt      -^F-rv-t^v"  ;CK/>-i-j-<»-c%^^>^    '^  dollars,  and  would  bring 

"'   "  '    -      .'        .  The  ground  is  worth       ....        t/J.O-O'^ 


that  sum,  if  offered  for  sale. 


.Oy^ 


The  improvements  are  worth 


.t9<3(3 


Fig.  its.— Re.m.   Bst.vte  Loan  Appmcatiox  Sheet. 


306 


TRUST  COMPANIES. 


There  are  several  styles  of  notes  used  in  connection  with  mortgage 
loans.  One  is  a  simple  promissory  note  containing  a  memorandum  of 
the  fact  that  it  is  secured  by  a  real  estate  mortgage,  such  as  that  shown 
in  Figure  179-  Another  form  is  more  elaborate,  and  is  accompanied  by 
interest  coupon  notes.  The  mortgagors  sign  both  the  original  note  and 
the  interest  coupons;  and  the  latter  being  in  the  form  of  notes  are  col- 
lected at  maturity  in  the  same  manner  as  any  note,  thus  making  it  un- 


2  Uz^JK^ 

o  !■  ■ 

•-  I' 


Q-")Vg-    ^XA/L- 


liter  «.l»_Lt£L^ 


i-X 


Zbe  <LlcvAant>  ZTrust  (Eompan?  .t  n^ci 


lot  valuo  r«Ool»^d,  Uui  I 


I  «tth»  i».M    /^^OC  |>t-f«n,.  t 


I  imin  oi  Maceh.O  JAe,  Soptsmtaf 


ou.JLuliLa- 


Fig.   179. — Moktg.   je   Note. 


<S7:^O0~ 


'llAa,^^^rLtfe^,^     Xvi^  n  J.90G_ 


^m^/>^_Al^ 


Tn.^p2:iK}L 


\{£j^^  (jy.  SiiJ^^^J^ 


Fig.  180.— 3I0ETGAGE  Xc 


FORMS  FOR  BANKING  DEPARTMENT. 


307 


pecessary  to  send  interest  notices.  A  form  of  such  a  note  is  shown  in 
i'igure  180,  and  one  of  the  accompanying  interest  coupons  is  shown  in 
Figure  181.  This  particuhir  form  of  note  and  coupon  is  used  for  mort- 
gages on  farm  property.  Figure  182  gives  another  form  of  interest 
coupon. 

The    form   of    note 
wliieh   are  to   run   for 


with   interest   coupons 
a   considerable    period, 


is   well    adapted    to   loans 
md    particularly   to   loans 


c5-7^^^ ^ 


^'^"i^-Lj. MS'/.9Q1,  /^/U^n/rr 


-/ 


/////  <n//'n.)/  {/ufr/-//  ////<r  //////t/rt/// 

,Zi^  ' '  ^  ^^  ^^' — — — 


Fig.  181. — Ixterest  Coupox  to  Acck^u'any  Moutgage  Note  Showx  ix   Fig.  180. 

made  with  a  view  to  selling  theni  to  investors — a  business  which  is  stead- 
ily grooving  in  volume,  and  which  some  companies  make  a  specialty. 
The  shorter  form  of  note  is  bitter  adapted  to  loans  which  are  to  run  for 
a  comparatively  brief  period,  or  which  the  mortgagor  is  to  have  the 
privilege  of  paying  in  part  or  in" 'f till  at  his  option  after  a  certain  date. 
It  is  a  common  practice  to  make  such  notes  for  one  year,  and  to  carry 
them  after  maturity  as  demand  obligations. 


©"^^^t^ 


OO^for value  receive dTWUpronnsc  top&ylo 


go     ;     Ix-eJ-cr  eatbeofficcofTHE  GUARANTEE  TITLE  AnoTRUSTCOMPANXujClevelandOhia 


C3  < 


^^ ^ 

Oi)  Ihc  tir»l  d.vy  of  -^]44a=fC^_ 


beiDq  Ujtcrcsl 


Tiis  coupon  note  shall  bctkr  interest  ot  eight  per  cen^umper  SSmum&ftcr  mtvlvint\- 


Fig.  U 


HMMMMMMHMMWIMIMMIMMM 

KTEUEST    CorrON'    TO    ACCOMPAXY    MORTGAGE    XoTE. 


In  Figure  1S3  is  shown  a  form  of  mortgage  note  used  in  New  York 
and  elsewhere,  and  known  as  a  bond.  The  document  is  a  folded  sheet, 
containing  four  pages,  of  which  only  the  first  is  shown  in  the  figure. 
On  the  second  page  provision  is  made  for  the  acknowledgments  of  the 
makers  and  the  witnesses  of  the  instrument.  The  third  page  provides 
forms  for  the  record  of  interest  payments  and  payments  on  principal, 
and  the  last  page  is  the  cover. 


308 


TRUST  COMPANIES. 


Bond. -No.  674 


KNOW  ALL  MEN  BY  THE5E  PRESENTS, 


That  I,   v/illian  H.  Mantelle, 


hereinafter  designated  as  the  obligor    ,  do        hereby  acknowledge    tiyself 
indebted  to 


The  Title  Guarantee  and  Trust  Company 


hereinafter  designated  as  the  obligee,  in  the  sum  of     three    thOV  sand 


dollars,  lawful  money  of  the  United  States,  which  sum    1      the  said  obligor    do    hereby 

covenant  to  pay  to  said  obligee, 
its  SlfcceeCCf^  or  assigns,  on 
the  tv/entieth  day  of  ApriL  nineteen 
hundred  and  ten  ^  ^jth  interest  thereon,  to  be  computed  from  the 
twentieth  day  of  April  ,  190  6,  at  the  rate  of  niX 
per  centum  per  annum,  and  to  be  paid  on  the  twentieth  day  of  Ootober 
next  ensuing  the  date  hereof,  and  semi-annually  thereafter. . 


AND  IT  18  HEREBY  EXPRESSLY  AGREED  THAT  the  whole  of  said  principal  sum 
shall  become  due  at  the  option  of  said  obligee  after  default  in  the  payment  of  interest  for  thirty 
days,  or  after  default  in  the  payment  of  any  tax  or  assessment  for  thirty  days.  All  of  the 
covenants  and  agreements  made  by  the  said  obligor  in  the  mortgage  covering  premises 
therein  described  and  collateral  hereto,  are  hereby  made  part  of  this  instrument. 

Signed  and  scaled  this    twentieth  ^^V  o^     April  ,1906. 

In  thb  pkbsen'ce  of 


J 


Fi6.   183. — Mortgage   Bokd. 


FORMS  FOR  BANKING  DEPARTMENT.  309 

The  form  of  mortgage  varies  somewhat  in  different  localities,  but  the 
following  wording  of  an  Ohio  form  shows  all  of  the  essential  features: 

MORTGAGE  DEED. 

KNOW   ALL    MEN    BY   THESE    PRESENTS 


That 


the  GRANTOR for  the 

CONSIDERATION   of    DOLLARS, 

($ )    received    to full  satisfaction  of  The  Blank  Trust 

Company,  the  GRANTEE,  do  GIVE,  GRANT.  BARGAIN.  SELL  AND 
CONFIRM    unto    the    said    GRANTEE,  Its  successors  and  assigns,  the 

following  described   premise  s :     Situated    in    the 

of County    of and  State  of  Ohio, 

and   known    as 

be  the  same  more  or  less,  but  subject  to  all  legal  highways.  TO 
HAVE  AND  TO  HOLD,  the  above  granted  and  bargained  premises, 
with  the  appurtenances  thereunto  belonging  unto  the  said  GRANTEE, 
Its  successors  and  assigns,  forever.  And the  said  GRANT- 
OR   do  for and heirs,  executors  and  adminis- 
trators,   covenant  with    the  GRANTEE.  Its  successors  and  assigns,  that 

at  and  until  the  ensealing  of  these  Presents well    seized 

of  the  abo.e  described  PREMISES  as  a  good  and  indefeasible  estate 
In  FEE  SIMPLE,  and  have  good  right  to  bargain  and  sell  the  same 
In  manner  and  form  as  above  written:  that  the  same  are  FREE  AND 
CLE.^R   FROM   ALL   INCUMBRANCES   whatsoever 


and    that will    WARRANT    AND    DEFEND     said     premises, 

with  the  appurtenances  thereunto  belonging,  to  the  said  GRANTEE, 
Its  successors  and  assigns  forever,  against  all  lawful  claims  and  de- 
mands whatsoever 

And ,    the    said 

of  said    

do    hereby    llEMISE,    RELEASE    AND  FOREVER  QUIT   CLAIM    unto 

the  said   GRANTEE,   its   successors  and    assigns,    all right 

and   title   of   DOWER   in   the  above   described   premises. 

THE  CONDITIONS  OF  THIS  DEED  ARE  SUCH,  That,  whereas, 
the   said 

ha....  executed    and    delivered'  to* '  the  said  The   Blank  Trust  Company, 

promissory  note ... .  ,   dated    

for    the    sum    of DOLL.VRS, 

payable  to  its   order 

after  date,   with   Interest  at   the  rate  of per  cent,  per  annum. 

payable  quarterlv,  on  the  Fifteenth  days  of  March,  June.  September 
and  December  of  each  year  until  paid;  principal  and  interest  being 
payable    at    its    office,    and   all    overdue  interest   bearing  interest  at  the 

rate  of per  cent,   per  annum,     payable    quarterly    until    paid; 

and   ha agreed   to   keep   the   buildings     on     said     premises,     at     all 

times    until   payment   of   said   note,   insured   against    loss   or    damage    by 

fire,    in    the   sum   of  at  least   $ and  under   policies  approved 

by  and  deposited  with  the  Grantee  and  which  shall  provide  for  the 
payment   of   any   loss    under    the   same  to  the  Grantee  or  its  asstems  as 

its   or  their  interest  may  appear;   and     ha also    agreed     to    piy    all 

taxes  and  assessments  levied  on  said  premises  as  the  same  become 
due  and  payable:  and  ha.... also  agreed  that  if  such  insurance  be  not 
so    procured,    or    such    ta.xcs    or    assessments  so   paid,   that   the  Gr.nntee 

or   its   assigns   may   procure    or   pay  the  same,   and  that will   on 

demand  pay  to  it  or  them,  the  cost  of  such  insurance  or  amount  paid 
for  taxes  or  assessments,  with  interest  thereon  at  the  rate  of  eight 
per  cent,   per  annum. 

AND  GRANTOR... AGREE. ..  ,  that  If  any  taxes  or  assessments  on 
said    premises    or    any    in.=tallment  of    Interest     or    principal     of    said 

note or  premium  of  Insurance,  as  herein  provided  for,  be  not  paid 

when  due  or  within  fifteen  days  thereafter,  then  s.aid  entire  principal 
shall  also  'become  due  and  payable  at  the  option  of  the  holder  of  this 
mortgage,  and  also  that  upon  any  such  default,  the  holder  hereof 
may  take  possession  of  said  premises,  rent  the  ^ame.  and  collect  all 
rents  accruing  on   leases  thereof,   and   after   deducting     Its     reasonable 

charges   therefor,    apply    the   proceeds  to  the  payment  of  said  note 

or  to  the  performance  of  any  of  the  agreements  above  recited  and 
may  so  continue  to  do  until  full  payment  and  performance  shall  have 
been  thus  effected. 


310  TRUST   COMPANIES. 

Now,  if  the  said 

heirs,    assiarns,    executors    or   administrators,    shall   well    and    truly   pay 

the  aforesaid  note and  interest  thereon  to  the  said  The  Blank  Trust 

Company,  its  successors  or  assigns,  and  perform  the  several  conditions 
above  recited,  then  the  above  DEED  shall  be  void;  otherwise  the  same 
shall    remain    in    full    force   and    virtue  in  law. 

IN  WITNESS  WHER?:OF hereunto  set hand 

at Ohio,    this day    of 

in   the    year  of    our    Lord    One    Thousand    Nine 

Hundred  and 

SIGNED,    AND    ACKNOWLEDGED 
IN    PRESENCE   OF 


THE  STATE   OF  OHIO, 

ss. 
County, 


BEFORE  ME,   a in  and  for  said  County, 

personally  appeared  the  above  named    

, ,     who   acknowledged 

that did   sign    the    foregoing  instrument,  and  that  the  same  is 

free   act   and   deed. 

IN  TESTIMONY  WHEREOF,  I  have   hereunto     set   my   hand   and 

ofRcial  seal,  at this 

day    of A.    D.   190 


A  common  form  for  the  satisfaction  of  a  mortgage  is  as  follows: 
'"The  conditions  of  this  mortgage  have  been  complied  with,  and  the  same 
is  hereby  satisfied  and  discharged."  This  is  usually  printed  on  the  back 
ct  the  mortgage,  ready  for  use  when  wanted.  A  form  for  the  assign- 
ment of  a  mortgage  reads  thus:  "For  a  valuable  consideration,  the  re- 
ceipt whereof  is  hereby  acknowledged.  The  Blank  Trust  Company  here- 
by sells,  assigns  and  transfers  unto    all  its  right,  title 

and  interest  in  and  to  the  within  mortgage  and  the  obligation  secured 
thereby." 

Journal  records  regarding  mortgage  loans  are  made  on  the  journal 
already  shown,  in  Figure  lt)3;  or,  if  no  loan  journal  is  kept,  are  entered 
upon  the  general  journal  in  the  same  manner  as  records  of  collateral 
loans.  In  either  case,  the  total  figures  for  each  day  are  of  course  recorded 
on  the  general  books.  The  ledger  forms  may  be  similar  to  those  shown 
for  collateral  loans,  except  of  course  that  a  description  of  the  real  prop- 
erty mortgaged  is  substituted  for  the  description  of  collateral.  The  form 
of  ledger  will  depend  somewhat  upon  the  local  usages  regarding  real 
estate,  and  also  upon  whether  the  loans  are  usually  upon  city  or  country 
property.  Figure  184  gives  the  form  of  a  ledger  card  uniform  in  size 
and  style  with  the  collateral  loan  ledger  cards  shown  in  Figures  164  and 

167.  The  size  of  the  card  is  5  by  8  inches.  The  interest  record  is  given 
on  the  back  of  the  card,  and  is  the  same  form  as  tliat  given  in  Figure 

168.  A  plat  of  the  property,  together  with  other  information  for  which 


TO    )JA.^X. 


FORMS  FOR  BANKING  DEPARTMENT.  311 

nCAL  CSTATK   LOAN  «■-    '  ^TJ 


^j^  o.  U)iLu:e' 


I    Ao^/oC^Tim    /ij^T-,     out/lj/ol    w.Tt  ^%         i«T   outjSti;«_j 


t, 

^^. 

oL 

— H^ 

2  noo 

- 

- 

Z5 

ooo 

- 

.„„,.,.  OiU^^^u 

«~«HB  Sh-^-'Ts.  A^r^ 

U 

13 

ni 

1 

500 

/ 

■>oc 

...,..-  :i3 

-<^-    /nT 

-     .  -  7A           ,^  /^ 

mu.                     '         iNOOO. 

.«.«.  Qu..^.  */>/?»  voi      .aooo^                 m'^,^joA 

Fig.  184. — Mobtgage  Ledger  Card, 


>C    ^it^-Jt  .-7,,^"  &>>,-, , 


■v.LA.    =.;''ilc<- 


./ 


t^u,   S^fi>  .<-ii^K   ..^T.-^'-i^"-^  -^  'CH 


J^ 


■^ro-  ~"  \ 


1.)  At^f  '■N^  4n.Ti        A?  -i^-^^^  ^  . 


-lO- 


T..  ._«.>.   Aa..| 


Fig.  185. — Mortgage  Loax  Ledger  Sheet. 


312  TRUST   COMPANIES. 

there  is  not  room  on  the  card,  may  be  given  either  on  the  loan  envelope 
shown  in  Figure  186,  or  on  a  sheet  contained  in  the  envelope.  These 
ledger  cards  and  the  loose  leaves  shown  in  figure  185  are  filed  in  alpha- 
betical order,  so  that  no  separate  index  of  the  loans  is  required,  as  i» 
the  case  when  a  bound  book  is  used.  In  Figure  185  is  given  a  loose-leaf 
ledger  form  15  by  IS^/o  inches  in  size,  which  provides  space  for  more 
elaborate  information.  The  arrangement  of  the  items  could  be  improved, 
but  the  form  shows  the  information  called  for. 

The  various  papers  connected  with  the  loan,  including  the  note,  mort- 
gage, abstract  and  insurance  policies,  are  placed  in  an  envelope  made  of 
Dianila  or  other  strong  paper;  and  the  envelopes  are  filed  in  alphabetical 
order  (or  numerical  order,  if  preferred)  in  cases  like  those  already  de- 
scribed for  collateral  loans.  Figure  186  shows  the  face  of  such  an  en- 
velope. 

There  is  frequently  occasion  to  release  a  portion  of  the  property 
covered  by  a  mortgage,  upon  payment  of  a  part  of  the  loan.  A  stand- 
ard form  of  release  reads  as  follows: 


For    a    valuable    consideration,   The    Blank    Trust   Company   heieby 
releases    from    the    lien    and    operation    of    a    certain    mortgage    from 

to   the  said  The '  Blank   Trust   Company,  and  recorded  in  Vol 

on   Page County    Records,    so    much    of    the 

property   therein   described  as   is   known  and  described  as  follows,  viz: 


without, 

however,   invalidating   the  lien   of  said    Mortgage    upon    the    remainder 
of  the  land   therein  described. 

Signed   this day  of A.   D 

THE    BLANK    TRUST    COMPANY. 
In    presence    of 
By     


THE   STATE  OF 

County. 

Before  me,  a  Notary  Public,    in    and    for    said    county,    personally 
appeared   the  above   named  The  Blank  Trust  Company,  by 

of  the  said  Company,  who  acknowledged  that  they  and  by  them  as  its 
officers  The  Blank  Trust  Company  did  sign  and  seal  the  foregoing 
instrument,  and  that  the  same  is  the  free  act  and  deed  of  the  said 
The  Blank  Trust   Company  and  of  themselves  as  such   officers. 

IN  TESTIMONY  WHEREOF,  I  have  hereunto    set     my   hand  and 

official   seal   at this 

day    of A.  D 


Notary    Public. 
Miscellaneous  Loan  Forms. 


When  a  payment  is  made  on  a  note  it  is  sufficient  to  endorse  on  its^ 
back  the  word  "Paid,"  with  the  amount  of  payment  and  the  date  thereof. 
It  is  a  convenience,  however,  to  have  a  rubber  stamp  for  this  purpose. 


FORMS  FOR  RANKING  DEPARTMENT. 


315 


showing  the  balance  due  after  the  payment,  so  that  such  balance  may  be 
seen  at  any  time  without  having  to  stop  to  figure  up  the  total  of  pay- 
ments madf.  Figure  187  shows  a  form  of  such  a  stamp. 

The  loan  department  should  keep  a  special  tickler  for  its  work.  The 
old-time  bound  book  tickler  may  be  used,  but  cards  are  much  more  con- 
venient. Figure  188  gives  a  form  of  tickkr  card  for  maturities  of  time 
loans.  A  form  of  tickler  card  for  insurance  expirations  has  been  shown 
in    Figure   26. 

Notices  of  interest  due  on  loans  should  be  sent  to  borrowers  tin  days 
or  two  weeks  before  such  interest  is  payable.     These  notices  need  state 


Sr<rL,,(J^ 


REAl.  errKTt  llORTCACt  U3AN  N^.£2£*£_ 


*LLOr  O"  SUB  Oiv        ^'^Aa^Wt 

sue  LOT  Mo.  'O oRia  lot  u.  164- 


INSUBANCE  _l  - 


I'IG.     18(). EXVELOPE     FOE     MORTGAGE     LOAN    PAPERS. 

'^kjolo    PAID  ON  WfTHIN  LOAN  .^\5P0>~- 

BALANCE  DOS         ^3^00.— 

Fig.  187.— Stamp  for  Endorsement  of  Payments  ok  NoxEi. 


Time  Loans  Due 


^QzfCK^^^AjyLi"  8  —    .,^6 


'± 


NUMMCn 

MAKt* 

AMOUNT 

3^7 /f<P 

<>,rVl^  ^.wLii^^     U];L^_ 

..<3-0c 

lO 

—  - 

t 

—  ■ 

•4 

i-r** 

CO 

Fig.  188.— Time  Loak  Tickler  Card. 


314  TRUST  COMPANIES. 

only  the  total  amount  of  the  interest  and  the  due-date;  but  it  is  more 
satisfactory  to  the  borrower,  and  therefore  often  saves  time  in  the  end,  to 
send  a  detailed  statement,  showing  the  principal,  time,  rate  and  amount 
of  interest  for  each  item.  Figure  189  shows  such  an  interest  statement. 
When  payment  is  made,  the  notice  is  stamped  "Paid,"  and  serves  as  the 
customer's  receipt.     Figure  190  shows  a  form  having  a  stub  attached, 

tf)C 

(ZljCVClHtib  MAIPT  OKFIOE-  No.  I  EUCLID  AVE. 

Zvn^i  Company? 


THE  INTEREST  ON  YOUR  REAL  CSTATC  LOAN  WILL  BE  QUE  June  ts.  1906 
KINDLY  SEND  YOUR  CHECK  IN  ACCORDANCE  WITH  THE  STATEMENT  BELOW. 

STATEMENT 
AMOUNT  MO'8  DAYS  RATE 


6  6fo 


PLCASe   PRCSCNT  THIS  STATEMENT  WITH  YOUR  PAYMENT. 

B   8-5-5-6 

Fig.  189. — Interest  Notice. 

which  is  a  convenience  when  a  large  number  of  interest  payments  are 
received  in  a  short  time.  When  the  payment  is  made,  the  teller  simply 
stamps  the  notice  "Paid"  with  a  rubber  stamp  bearing  the  date,  tears  off 
the  stub  and  places  same  on  a  spindle.  This  makes  it  unnecessary  to  stop 
at  the  time  to  make  a  book  entry  of  the  payment;  provided,  of  course, 
the  customer  remembers  to  bring  the  notice  with  him. 


FORMS  FOR  BANKING  DEPARTMENT. 


S15 


Figure  191  sIjows  a  form  used  for  the  record  of  interest  due  at  the 
Tegular  interest  periods.  The  names  of  the  borrowers  are  arranged  in 
alphabetical  order,  and  the  sheets  are  filed  in  a  loose-leaf  binder.  The 
details  of  the  interest  on  each  loan  are  shown,  and  from  thtse  sheets  the 
stenographer  copies  the  matter  for  the  interest  notices  sent  to  borrowers. 
When  the  customer  calls  to  pay  his  interest  and  has  failed  to  bring  the 


Wra-y^yy^    V^-vyv^CAr 


COLLATKnAL 


Oo   ^4at    Ddach    Thb   Stub 


;«  ^>.  Till  »T  <•. 


(Bv-Trwr>^  '^'^-^  §lx.^:;t;^ 


37/>s~  CQ/Hi:<o>v.  J^J^. 


MTOM  VOV»  COI.I.ATEHAI.  tjOAM  OP  »  lS"S  7'*^^^ 
^0^ «K  O.  «  .,  .V  ..  ..... 


Bring    This    Notice    With    You 

Fig.  190. — Iktkkkst  Notice. 


interest  notice,  the  amount  due  from  him  is  easily  ascertained  from  these 
•sheets.  In  the  last  column,  headed  "Date  Paid,"  the  date  of  payment 
is  stamped  with  a  dating-stamp.  The  amounts  in  the  column  headed 
"Total  Loans"  furnish  a  trial  balance  of  the  loans  on  the  date  when  the 
statement  is  made  up. 

Some  companies  keep  a  loan  book  in  which  are  entered  all  loans  in 
the  order  in  which  they  are  made,     A  form  of  this  book  is  shown  in  Fig- 

Inlcrcl  dut  on  CAxa-^    GJ-fe^    Lo»n.   ^X</-vw-    /vT- lapC 


.ix. 

......^.. 

-n^- 

^. 

- 

•.:^ 

— 





^^ 

(}i\/-<.±^i(^W^^. 

^,-> 

6 

^ 

p,v. 

'■^ 

!h...^.yf.Ai.  •»~rf>Sti.vw 

fn 

ifi 

Ir 

'iT' 

f|i 

iT 

., 

r.. 

{' 

, 

,,- 

ZS'V' 

.i.: 

ij 

(■ 

^^ 

i'l 

, 

Ml 

11 

^^a,.  %o\..it.. 

'1 

V 

<j 

-■ 

Via.  191. — Sheet  for  Figuriko  Interest  ox  Loans. 


ure  19~-  I'l'i"  loans  are  numbered  in  consecutive  order  without  regard 
to  their  kind,  real  estate,  demand  collateral  and  time  collateral  loans 
being  included,  as  well  as  discounts  in  cases  where  a  discount  business  is 
conducted.  This  book  is  used  principally  by  those  companies  which  do 
not  use  a  separate  loan  journal.  When  the  latter  is  used  the  loan  book 
is  superfluous. 


816 


TRUST   COMPANIES. 


"r.v 

^o 

&t.fJ-R'   TV 

K.NT 

Anou~T 

TmE 

l; 

TfEMftl^KS 

S           f  CK    ^U^oi^ 

.,^    .  ;>^^  1^*     <R^v    flv^ 

^   t 

7... 

rr 

.. 

JKi^ 

IL.iI..^  1  OvU^      , 

•^-•lil 

(-f 

... 

-«^,..J    ^^' 

Y- 

It 

3-]K. 

MO  >tf»joJi.,„<l^ 

.Tn^  a^.-s^w-a^a. 

T.~. 

, 

f»A 

i 



_j 



Fig.  192. — Loan  Book. 

At  each  meeting  of  the  executive  committee,  or  finance  committee,  or 
whatever  committee  has  the  supervision  of  loans,  a  list  of  all  loans  made 
since  the  last  meeting  of  the  committee  is  submitted,  and  the  list  is  for- 
mally approved  by  the  members  of  the  committee  placing  their  signatures- 

RECORD  OF  LOANS  MADE    Mch .    ^,    190GrO  I'cn.    6,    1000. 


MAKER                                                                       SECURITY 

AMOUNT 

DATE. 

KIND 

"lillian  aj;a  Annie  Dr.ith 
Janes  S.  Tiioiiir^sor. 
Doe  anO  Foe 

/.  F.  Cooke  3 

S.  M.  a.-iia  }.:ar/  K.  wild 

40  by  136  ft.    loira  St. 

ZO  sh.  v..  Y.   C.  &  H.  n. 

6M  <^.3it:-.viaiG  ?r.    CO. 

■)nclH. 
100  sh.  rto.  pfri. 

2  H  cj-io.  ^-  ;i.v;.  ext.  4 

61  by   175  ft.    lUifftrd 

2 

1 

7 

1 

t3 

250 

500 

?500 
600 
000 

Feb 
!.;ch 

28 

1 

2 

n.  ?.. 

D. 

13. 
T. 

F.    K. 

/ 

/-] 

^ 

^ 

EXECUTIVE 
COMMITTEE 


Fig,  193. — Form  for  Report  to  Executive  Committee. 


FORMS  FOR  BANKING  DEPARTMENT. 


317 


on  the  page.  This  record  is  a  part  of  the  minutes  of  the  committee.  In 
some  companies  the  list  is  typewritten  on  a  blank  sheet  or  sheets  of  paper, 
which  are  filed  in  a  loose-leaf  binder.  Figiiure  193  shows  a  printed  form 
.for  this  use. 

Bills  Discounted. 

Although  trust  companies  art-  in  many  states  forbidden  to  discount 
paper,  there  are  several  states  in  which  they  are  permitted  to  handle 
this  business,  and  the  necessary  forms  are  therefore  included  here. 

By  some  companies  all  applications  for  discounts  are  entered  in  an 
"Ofl'ering  Book,"  wherein  are  shown  the  maker  or  makers  of  each  note, 
the  endorsers,  the  name  of  the  person  or  firm  by  whom  the  discount  is 
•desired,  the  amount  and  time  of  the  note,  and  any  remarks  which  will  aid 
in  forming  a  judgment  as  to  the  desirability  of  the  paper.  A  column  is 
also  provided  in  which  to  note  whether  the  paper  is  acctpted  or  rejected. 
But  many  companies  dispense  with  the  use  of  this  book,  and  depend  for 
'this  record  upon  the  minutes  of  the  finance  committee. 

When  paper  offered  for  discount  has  been  accepted,  it  is  entered  in 
the  Discount  Register,  a  form  of  which  is  shown  in  Figure  IQ-i-  This 
Tccord  shows  all  necessary  data  regarding  each  note.     The  notes  are  en- 




RECrSTER   OF 

DISCOITNTED 

BILLS 

~"L."     t^' 

1    - 

., 

=  =S 

1 i ^-M- 

vW 

■  +- 

i-4 

i 

-H-4 

Fig.  194. — Discockt  Register. 


tered  in  the  order  in  which  they  are  received,  and  are  numbered  in  con- 
-secutive  order,  the  numbers  being  written  or  printed  in  the  register,  and 
from  there  copied  on  the  notes. 

At  the  close  of  the  day  the  columns  of  the  register  showing  the 
amounts  of  bills  discounted  and  of  discount  or  interest  are  footed  for  the 
day's  work,  and  the  totals  are  usually  entertd  in  the  general  journal 
directly  from  the  register,  although  some  companies  prefer  to  have  each 
note  entered  separattly  in  the  general  journal  from  debit  tickets  fur- 
nished by  tlie  discount  clerk.  The  credits  for  the  Bills  Discounted  ac- 
count on  the  general  books  are  generally  made  from  cndit  tickets  fur- 
nished by  the  discount  clerk;  but  discount  registers  are  in  use  which 
provide  for  the  record  of  discounts  paid.  If  such  a  register  is  used,  the 
general  bookkeeper  gets  the  total  credits,  as  well  as  the  total  debits,  foi 
the  Bills  Discounted  account  directly  from  the  register. 

After  a  note  has  been  entered  in  the  register,  a  memorandum  of  its 
due  date  sliould  be  made  in  the  discount  tickler,  a  common  form  of  which 
is  shown  in  Figure  195.  If  preferred  a  card  tickler  may  be  used  instead 
of  the  book. 

The  note  should  next  be  entered  in  the  Discount  Line  Ledger  (also 
•called  the  Customer's  Liability  Ledger),  three  different  forms  of  which 


318 


TRUST   COMPANIES. 


DISCOUNT   TICKLER 
Thursday i90- 


Fig.  19j. — Discount  Ticki.i;h. 

are  shown  in  Figures  19t),  197  and  198.  The  headings  of  the  cohnnns- 
make  these  figures  self-explanatory.  It  will  be  noted  that  the  ledger 
shown  in  Figure  197  separates  accommodation  and  commercial  paper, 
while  that  shown  in  Figure  198  separates  paper  on  which  the  customer  is 
maker  from  that  on  which  he  is  endorser.  The  object  of  this  record 
is  to  show  the  amount  of  paper  that  is  being  carried  for  each  customer, 
so  as  to  prevent  any  one  from  getting  more  than  his  proper  amount  of 
credit;  and  also  to  show  the  kind  of  paper  usually  oifered  by  the  customer 
and  the  parties  whose  paper  he  handles. 


[Dal-L^ 

a    ^u.. 

x± 

.. 

s.c„,r. 

5    =    s 

i    1    i    1 

i  i 

S 

OAHEV 

...«. 

CMOIIS. 

„.       1 

S-^,^^~UUrCb- 

.-r^t,,  .<  S^^Oi 

')<C. 

'1 

'  'n 

=  „n 

i    3    t 

a  iTj  Lo-o-<v,i 

J 



- 

1 

L 













1 

. 

LINE  LEDOBR 


Fig.  196. — Lixe  Ledger. 


■    ...;.= 

,.o,^:i=, 

v,v 

■■';:.".'-• 

"-.;■.:':• 

.:..,            1 

"  7 

J  "<     , 

'„   r,.  ^  .  .u  i,.;/, 

l.;,,'i.,..^^.,.,-;^ 

I,H 

^ 

1" 

T 

^,:; 

;*.;« 

,- 

M- 

%^l 

•.  ,    'h*  j  \f>kJi 

,1. 

, 

■■  ■■c 

-■-T 

%  i. 

:,  ■;     &aL>-  '--^^'■^^^^ 

<    T    - 

r 

, 

1 

*« 

J 

ii"^ 

< 

** 

,^,- 

1 

s„«,™. 

Fig.  197. — Line  Ledger. 

-.-. _ ,.-/ 

— ; — 

rr 

PARriCULAHS 

,.,. 

-  ■ 

liiLl. 

7n|,-,, 

<"J  .'. 

'h'<  i 

C,  ,,u..  "-  (P 

?,/. 

„ 

,, 

'''■U 

,^ 

r-^i  '" 

.<  4. ,..,./ 

,, 

h-m 

1iu,cU,wtv.-.v-. 

V.,._.X.   ul.J-.,- 

,, 

'1,^-1 

Y.^....-<  .lU^.- 

J-.i..,,..     c 

v.. 

TJ" 

1 

1 

III        1 

1 

1 

Fig.  198. — Lixe  Ledger. 


FORMS  FOR   BANKING  DEPARTMENT. 


319 


$2^ 


Cleveland,  O—^U^hJ^  1  ——\9oL 
.after  (^<«e-N2_ promise  to.pay 


iDoliare^ 

Value  received,  witn  intereet 


to  the  order  "of  JLatXA*^  Q.  i 

at_4_per  cent,  per  annum,  payable..4i:iv4i:^cnnually. 

No..=__Due-^M ^ 

Fig.  199. — Common  Form  of  Note. 


To  the- 


JVame  {  Corporate  style  under  charter)  ..  ^. 

Business ~ 

Location Branches   _. 

For  the  purpose  of  procuring  credit  from  lime  to  time  from  you  for  our  negotiaiU  paper  or  otherwise,  toe  furmisk  you 

tvith  the  folUrjiing  statement  which  fully  and  truly  sets  forth  our  financial  condition  on  the day  of 

190  ..  :  -Jihich  statement  you  can  consider  as  continuing  to  he  full  and  accurate  unless 

notice  tf  change  is  given  you.  ffV  agree  to  notify  you  promptly  of  any  change  that  materially  reduces  our  pecuniary 
responsibility 

In  consideration  of  the  granting  of  such  credit,  -Me  agree  that  if  we  at  any  time  stop  payment  or  iecome  insolzfnt,  or 
commit  an  Act  of  Bankruptcy,  or  if  any  of  the  representations  made  below  prove  to  be  untrue,  or  if  we  fail  to  notify 
\cu  of  any  material  change  as  above  agreed,  then  and  in  either  such  case  ail  our  obligations  held  by  you  shall  immed- 
iately become  due  and  payable  without  demand  or  notice,  and  the  same  may  be  charged  against  the  balance  of  any 
deposit  account  kept  by  us  with  you,  we  hereby  giving  a  continuing  lien  upon'  such  balance  of  deposit  account  from 
time  to  lime  existing  to  secure  all  our  obligations  held  by  you 


Cub  in lUok  ... 

CuhoobaDd  

B'.lli  RfcciTtbl*.  good  ., 

AccouDM  K«oeiT«bl«.  good. 

Bill!  or  AcTouBt*  Rfceiiable,  oviog  by  OSInn 

UMchudiM.  fiolatMd  <Ho«  VkJn«d 

Mrirbtodiie.  unSiikbcd  (How  Vdaod 

Raw  Mtt*rul,  (How  Valued 


Macbiorrj  ud  FlitniM  . 


ri 


UABUUITIE 


toFajmbletorl 
j    BUk  P*7*bl«  to  own  Buk*.. 
1    Bilb  P*jahl«  for  Paper  Sold  . 

Boodad  D«bt  iWbeo  due 


Mortg^M  or  Liaoa  oo  Re^  EaUta .. 

Chattel 

Depoaili 


11 


I  UodlTidad  Pniflte>.. 


Fio.  :300. — Form  for  St.vtemekts  of  Borrowers. 


S20  TRUST   COMPANIES. 

A  common  form  of  a  note  is  shown  in  Figure  199- 

Applicants  for  discounts  are  usually  required  to  fill  out  statements 
showing  the  condition  of  their  business,  as  a  means  of  determining  the 
amount  of  credit,  if  any,  which  it  is  safe  to  give  them.  A  standard  form 
for  such  statements  has  been  adopted  by  the  American  Bankers'  Associa- 
tion, which  is  shown  in  Figure  200.  This  form  is  for  the  use  of  corpora- 
tions asking  for  accommodation.  The  form  for  individuals  and  partner- 
ships is  much  the  same,  except  that  it  omits  the  items  applicable  only  to 
corporations. 

CAPITAL. 


Authorized Subscribed P«id  in  ..-, 

Held  bj  Company  as  Treaeury  Stock 

How  paid  in:   Cash  $ ■ Other  Property 

Description  of  other  property  and  how  valued. 

What  portion  of  Real  Estate,  if  any,  has  been  acqubed  through  bad  debts 

In  whoee  name  is  title  to  Real  Estate  held 

Incorporated  in  what  State  and  under  what  general  Law  or  Special  Act 

Date  of  Charter Commenced  Business 

Are  Stockholders  liable  beyond  amount  of  stock  subscribed, If  so,  to  what  extent 

Amount  of  annual  businesa Vnnual  Expenses. Annual  Dividends. 

When  was  last  Dividend  declared Rate 

Insurance  carried  on  Merchandiae Real  Estate    .,_ 

Is  Mortgage  above  stated  a  first  lien  OQ  all  the  assets .■ 

Regular  times  of  taking  inventory - 

Give  basis  of  statement,  whether  actual  inveDtory,  by  whom  ( - 

taken  and  date,  or  if  estimate,  by  whom  made  and  date.  (_ • 

What  amount,  if  any,  of  Accts.  and  Bills  Eec.  not  charged  off,  is  past  due,  extended  or  renewed 

\faount  charged  oil  for  bad  debts  last  year Amount  recovered  during  same  period 

Amount  charged  oS  account  of  plant  preceding  year - 

State  last  date  of  taking  trial  balance  and  it  earn*  proved. Regular  times  of  balancing  books  . 

Nomber  of  Bank  Accounts  and  where  kept - 


NAME  IN  FULL. 


DIRECTORS. 

NAME  IN  FULL. 


Please  Sign  Company'a  Kame  here  . 
By 


Fig.  200. — Form  for  Statements  of  Borrowebs  (Continued). 


FORMS  FOR  BANKING  DEPARTMENT. 


321 


The  determination  of  lines  of  credit  is  a  dirticult  task,  and  if  done  on 
a  large  scale  requires  a  special  equipment.  The  larger  banks  maintain 
separate  credit  departments  devoted  to  this  work  and  furnished  with 
ample  equipment.  The  subject  belongs  to  a  treatise  on  commercial  bank- 
ing rather  than  the  work  of  the  trust  company,  and  readers  interested 
are  referred  to  discussions  of  the  credit  department  of  banks  in  current 
banking  periodicals  and  in  jniblishcd  books  on  the  subject. 

Investment  Records. 

To  a  larger  extent  than  banks,  trust  companies  usually  invest  a  por- 
tion of  their  funds   in  bonds  and  standard  stocks.     Journal  records   of 


INVeSTMCNT  Ns 


7^^ 


•owos 

Ki  f^<i.K<k,  •^Ky^.KOA. 

rOkcu, 

h 

c 

< 

'.\ 

(U 

■-Mc-P 

19 

n 

..,.„„ o. .....CL.,  ^.■.  1  --^JkM.-i              '-'  n.r,  L  ic 

^.-*i: 

...r-.'. 

TIT. 

.... 

...... 

— ~. — U.-^ 

F^ 

nTTTI 

..^... 

r. 

\cccc 

Ji^U^  Ivrt.  Z/l-Zi!C^<y\ 

^V.. 

I2\ 

a 

,J 

, 

^4 

Xc  c 

a.cc,r 

.,, 

LI'S 

2// 

2CC 

1 

r 

-™. 

-.-. 

•=X- 

^ 

Fig.  i-'Ul. — Invkstmknt  I.kih:kh. 


is^     (!>.(Rd.  ^<P. 

6 

1 

s 

.NT.    on    OIVIO«NOS    DU«         .Ic^y^.    1      9''*>lu£^      1                                              HATE    ^     % 

--^ 

out 

PlIO 

......  1 

/ 

1 

oL 

L^c 

/ 

2^ 

ci- 

ice 

7 

1 

oL 

(,00 

7 

/ 

oi 

Loo 

Ik..  JOJ. — Ukcord  of   Ikcome  ov  Ikvkst.mexts. 


S22 


TRUST  COMPANIES. 


star   Truet  C( 

.'.'lilrk 


'lhJcL_ 


ikM- 


PiMli'i  Sn.  lul 


'lila^ 


Trust    C 


!li.it^ 


3^ 'I 


•  TruBt   C^ 


|lEt.ar  IruBt 

'Ml 


Fig.  203. — Cleaeing-Hotise  List. 


FORMS  FOR   BANKING   DEPARTMENT. 


323 


1 

^ 

n        1 

li«l»tllC» 

IMtoMI 

I             Mutt 

FMMmI 

FMMM 

.«...«- II  S-...  1 

r>o> 

••»• 

n<» 

noil 

nt,m 

ram 

■'"m  uTi ' 

0    :«.  7.-..- 

'■.'■ifC 

St.,r   Tr-jLt    CO 

Ptar   T/j»t   Co 

r'^^-:; 

.   C'j      rt»i-  T,-..o»  Co 

n 

1  ,- 

... 

, 

^ 

It      I 

-M 

c  ,   ;    i  t 

(  ;^ 

;  I 

11.   t  '. 

'i(  / 

0.                     ^  *   1   *< 

/  ,■•   Li* 

'^^ 

n  -. 

'fc? 

..^cu^ 

i 

i                        >  1    •    t  -^ 

HI 

Ml 

tti 

r 

"^ 

^■r    "^ 

^xl, 

( 

I'if  0  N^ 

.'  s-i.<- 

1     '          \h'  ii 

- 

I- 
If 

Co 

■+ '/  1..  ■ 
.-<»3lK- 

(.LA 

^ 

/HlU- 

•mil  hC.  . 

U.      " 

1 J.^ 

7? 

^ 

/c-  >-<- 

.i'l  /(wic^-. 

If? 

4tu 

7.-uot    C 

" 

_  3  n 

1 



/iifi 

j 

-i-f  ni 

2tA 

Jcc 

i 

ru  ■• 

i-i ' 

(>.'<  Ji 

1  c 

3.'        . 

i-] 

1>  1  ' 

/  Ut  I- 

i  iC  i'i 

^ 

-lit' 

t.1. 

fill 

r.ta 

•  Tri 

" 

Co 

T*!<J 

•fXI   S"? 

It   H 

su^n 

It"  f 

Xl    -6 

1 

jrco  Jc 

f-1 

^  -f  iV 

3H  t' 

M 

ltt.4 

Lb. 

r..- 

».ii< 

rtaV  Tr^L-   cr 

iCj  ,s 

^ 

'' 

13.1   "f 

"m 

taTT 

,1. 

>■ 

1 

r.ta'-  ''•'1=' 

Co 

[iiii 

t_ 

-jj; 

2i 

ii 

7- 

• 

Fig.  ?03.— Clearixg-Hocse  List  (Continued). 


324  TRUST   COMPANIES. 

such  investments  are  usually  made  in  the  general  journal,  although  some 
companies  use  a  special  investment  journal,  the  general  arrangement  of 
which  is  similar  to  the  loan  journal  shown  in  Figure  l63,  separate  col- 
umns being  provided  for  Bonds,  Stocks  and  Sundry  Investments.  The 
total  amount  of  investments  at  any  time  is  shown  in  the  investment  ac- 
count or  accounts  in  the  general  ledger.  Sometimes  all  investments  are 
carried  in  one  account,  and  sometimes  separate  accounts  are  carried  for 
bonds  and  stocks.  The  detail  of  investments  should  be  shown,  except  in 
small  companies  where  the  number  of  investments  is  small,  in  an  invest- 
ment ledger,  which  may  be  either  in  book  or  card  form.  Figure  201 
shows  the  face  and  Figure  202  the  back  of  a  card  form  for  this  purpose. 
The  face  is  devoted  to  a  description  of  the  securities  and  the  ledger  ac- 
count, while  the  income  record  appears  upon  the  back.  Book  records  are 
in  use  which  follow  much  the  same  form,  the  upper  part  of  the  page 
containing  the  matter  shown  on  the  face  of  the  card,  and  the  lower  part 
of  the  page  providing  for  the  income  record.  These  records  may  be  kept, 
according  to  local  conditions,  either  by  the  general  bookkeeper,  the  loan 
clerk  or  a  junior  officer. 

Clearing  Checks. 

Trust  companies,  not  being  members  of  the  clearing-houses  (ex- 
cept in  a  few  instances,  as  in  Chicago),  clear  their  checks  through 
local  national  or  state  banks  which  are  members  of  the  clearing-house, 
and  which  act  as  their  agents  for  that  purpose.  There  are  a  few 
instances  in  which  trust  companies,  having  no  arrangements  for  the 
clearing  of  checks  through  the  clearing-house,  are  compelled  to  collect 
such  items  in  the  old  way,  by  their  own  messengers.  This  is  the  case 
with  those  trust  companies  in  New  York  which  have  withdrawn  from 
the  clearing-house  privileges,  and  with  Philadelphia  trust  companies. 

The  clearing-house  items  are  listed  to  the  diff'erent  local  banks  in  the 
seme  way  that  members  of  the  clearing-house  list  them — on  large  sheets 
having  columns  for  the  listing  of  checks  under  the  names  of  the 
banks  on  which  they  are  drawn.  Figure  203  shows  such  a  sheet.  These 
sheets  are  usually  bound  in  book  form,  and  each  alternate  sheet  has  per- 
forations between  the  columns,  so  that  the  lists  for  the  different  banks 
may  be  torn  out  and  delivered  with  the  checks  listed  thereon.  A  piece 
of  carbon  paper  is  placed  between  the  first  and  second  sheets,  so  that  one 
listing  of  the  checks  makes  two  copies.  The  first  sheet  remains  bound 
in  the  book,  and  is  a  permanent  record  of  the  out-going  "clearances." 
In  the  last  column,  headed  "Sundry  Items,"  are  gathered  the  totals  of 
all  the  other  lists  on  the  sheet;  and  this  list  of  totals  is  sent  to  the  clear- 
ing bank  with  the  checks  and  the  separate  lists. 


FORMS  FOR  BANKING  DEPARTMENT. 


3'2: 


Collections. 

\\'liiK'  trust  c'oiupaiiics  do  not  ordinarily  handle  tin-  volinnc  ot"  colKr- 
tion  business  tliat  regular  banks  do,  they  find  it  necessary,  if  doing  a 
CDmniercial  banking  business,  to  take  care  of  such  collections  as  are 
brought  to  them  by  their  depositors.  For  this  purpose  they  do  not, 
however,  usually  maintain  specially  equipped  collection  departments, 
but  handle  their  out-of-town  collections  through  the  banks  which  act  as 
their  representatives  in  the  local  clearing-houses.  Local  collections  are 
sometimes  handled  in  the  same  way,  but  more  usually  arc  collected  by 
the  company's  own  messengers. 

COLLECTION 


OUK  No 

UXOUNT  OF 

„,;•:.•:;.. 

"*,"', 

.tT.,..,3 

.  '>Lv 

^^ 

->/i_.'so 

■,,r-i^.^^^.TK 

'''t^cC 

/.^i. 

■S"'/ 

■^IfY 

>0 

^^■ 

., 

ai 

<  t^KuV„.  ■  M.'Jf^.,jii.^>v. 

X>  3. 

>sv 

■W 

fW. 

IC 

•) 

5-i 

.io. 

2<  ^ 

'Ol> 

^•^ 

i.1- 

.',:i 

.-.« 

i 

1 

.15 

Fiii.  JOIm.     C.)i  1  KcTioN   Hkoister,  Left  Page. 

REGISTER 

»«VUl.£  »T 

.c-.... 

jbu.^K:--k/^.-L — 

'2U'I      ^"n*^  i"^*.  vlV- . 

IVCi^^Os.  u-K.t? 

ov,..  -V  ...n-./. 

."if      '-'V.rw. -^/t  A/ 

^M V7L.t. 

J 

Fig.  201]). — Coliectiok   Uegistkh,   Huwit  Page. 


COLLECTIONS 


Fig.  -205. — Register  fob  Local  Collections. 


As  soon  as  an  item  for  collection  is  received  it  is  entered  on  the  col- 
lection register,  and  given  the  number  indicated  by  its  entry  on  the 
register.  There  are  two  general  forms  of  this  book,  one  being  designed 
for  "foreign"  or  out-of-town  collections,  and  the  other  for  local  collec- 
tions. Figure  201  shows  a  form  for  the  former,  and  Figure  205  for  the 
latter.  In  cases  where  the  number  of  collections  is  small,  or  where  they 
are  mostly  foreign,  the  use  of  two  forms  is  unnecessary,  that  shown  in 
F'igure  20t  being  readily  adaptable  to  both  kinds  of  collections.  Some- 
times, where  the  business  is  very  large,  a  special  form  of  register  is  used 
for  sight  drafts. 


326 


TRUST  COMPANIES. 


Time  collections  should  be  entered  also  in  a  tickler,  under  their  due 
dates.  The  tickler  may  be  a  card  form,  such  as  has  already  been  de- 
scribed (see  Figures  24,  25  and  26),  or  it  may  be  a  bound  book.  Figure 
206  shows  a  common  style  of  collection  tickler  in  book  form.  It  differs 
little  from  the  discount  tickler  shown  in  Figure  195,  and  the  same  book 
may  well  be  used  for  recording  maturities  of  both  discounts  and  collec- 
tions. 

Having  been  entered  in  the  register  and  the  tickler,  time  collections, 
if  local,  are  placed  in  the  files  awaiting  presentation  for  payment  at 
maturity;  and  if  out-of-town,  are  sent  to  correspondents  for  collection 
if  the  due  date  is  near,  or  if  the  due  date  is  distant  are  placed  in  the 
files  until  near  maturity.  Demand  collections  are  collected  or  sent  for 
collection  at  once. 


30 

COLLECTION   TICKLER 

THUBSDAT, , 

...1  90 

or  lm^t 

Paj.r. 

Where  P»J»l>le 

To  Wbom  Sent. 

For  Whom  CoH«rt.d 

Amount. 

Ck. 

Renirka. 

■        ■ 

' , J 

1 

= 

Fig.  206. — Collection  Tickler. 
TheSurerior  trust  COMRANY 

C/M^W^6k^^^  ^---^'  ^w^.-ai<rv:  _aL^_l90^- 


M^i^JII .__ _..._.._„_ 

We  enclittJoT  eoUtetim  and  credit,  itemt  cu  stated  below: 


•m. 

.>RKtO...OP.OTUT.     oo«arp.oT.«^ 

NambK. 

DRAWER 

ENDORSEE. 

PAYEB. 

AMODNT. 

'7-A  H  H 

i\:^i{:ULx.i^^ 

c^.  (^\  ^cwL{ 

Irt-llA. 

/(    sC 

"i 

'f  A  ( .  cf 

'\.   s.    -^ff-^x  ^>>L.^v, 

^y\^h±-^^^.r-e^ 

oHv^lUii, 

-J  X  ,s 

'^ 

77/"^ 

Fig.  207. — Remittance  Letter. 


Letters   of  Remittance,   Etc. 

Trust  companies  in  to^vns  where  there  is  no  clearing-house  of  course 
collect  their  local  items  by  messenger.  Their  out-of-town  items,  both 
cash  items  and  collections,  are  usually  collected  through  their  corre- 
spondents in  clearing-house  cities,  but  in  some  cases  are  sent  direct  to 
banks  located  in  towns  where  the  items  are  paj^able.  The  letter  forms 
used  for  listing  the  items  are  generally  in  bound  book  form,  the  alter- 
nate leaves  being  perforated  so  as  to  be  easily  torn  out.  A  sheet  of  car- 
bon paper  is  inserted  Tinder  the  perforated  leaf,  so  that  when  it  is  torn 
out  to  be  sent  with  the  items  listed  thereon,  the  next  sheet  contains  a 
copy  of  the  letter.  These  copies  remain  bound  in  the  book,  and  furnish 
a  permanent  record  of  remittances,  thus  serving  in  place  of  the  old-time 


FOR^rS  FOR   BAXKIXG  DEPARTMENT. 


327 


remittance  registtr.  This  plan  is  an  improvement  over  the  old  one  of 
having  all  such  letters  copied  in  the  letter-press.  Figure  207  shows  a 
form  of  such  a  letter.  If  it  is  used  for  cash  items,  the  letter  starts  with 
the  words,  "We  enclose  for  collection  and  credit,"  as  in  the  figure;  if 
for  collections,  the  word  "returns"  is  substituted  for  the  word  "credit" 
in  this  sentence.  In  all  other  respects  the  same  form  serves  for  the  two 
purposes.  Figure  208  shows  another  form  of  remittance  letter  that  is 
being  used  extensively  by  the  smaller  companies.  The  sheet  is  per- 
forated along  the  line  shown  at  the  right  of  the  figure,  and  on  the  re- 
verse side  of  the  portion  of  the  sheet  to  the  right  of  the  perforation,  is 
printed  a  duplicate  of  the  matter  shown  under  the  heading  "Valley  Park 
Trust  Company."  In  listing  the  items  the  end  of  the  sheet  is  folded 
over  along  the  perforation,  so  that  by  the  use  of  carbon  paper  two  copies 
arc  obtained  of  the  matter  listed  under  the  last  two  headings,  "On"  and 
"Amount."  The  end  of  the  sheet  is  then  torn  off,  and  serves  as  the  remit- 
tance letter.      By  this  ])lan  a  complete  descrij)tion  of  each  item   is  made 


Remittance  Sheet 


Valley  Park  Trust  Company. 

r<UU,  Park.  Mo-HLSiL'^  ^.l-^loL\ 
r<  ow/m  fat  iMteli»'<iu  cndU,  j 


5ffl^ 


Tk^JLL 


ir-^<K^. 


LAST  ENDOBSKR 


^ 


Fig.  208. — Remittaxce  Letter. 

for  the  records,  while  only  the  essential  part  of  the  matter  listed  appears 
on  the  letter  sent  to  the  correspondent.  This  form  may  be  used  either 
j)ermanently  bound  or  in  loose  leaves. 

Figure  209  shows  a  form  used  for  reporting  on  and  remitting  for 
collections.  Unpaid  items  are  listed  at  the  bottom,  as  shown  in  the  fig- 
ure. To  each  item  returned  unpaid  is  attached  a  slip  like  that  sho^vn  in 
Figure  210,  giving  the  reason  for  non-payment. 

When  an  item  sent  for  collection  is  not  heard  from  Avithin  a  reason- 
able time,  an  inquiry  is  mailed  to  the  bank  to  which  such  item  was  sent. 
The  form — called  a  "tracer" — used  for  this  purpose  is  usually  printed 
on  a  postal  card.      It  is  sliown  in  Figure  211. 


Offici.vl  Checks. 

Checks  issued  by  a  bank  against  itself  are  known  as  "cashier's 
checks."  Similar  checks  issued  by  a  trust  company  are  called  "official 
checks"  or  "treasurer's  checks,"  and,  sometimes,  "cashier's  checks."     Fig- 


S28 


TRUST  CO:\rPANIES. 


ure  212  shows  a  form  of  such  a  check.  Sometimes  the  check  is  signed 
only  by  an  officer,  and  sometimes  it  is  signed  by  an  officer  and  counter- 
signed by  a  teller.  Record  of  the  issue  of  official  checks  nxay  be  kept 
either  on  the  stubs  of  the  check  book  or  on  an  official  check  register.  The 
latter  is  of  tlie  same  form  as  the  draft  register  shown  in  Figure  21  i,  ex- 


The  CiT^TigtwspR  €jp^f^ 

LN,  Ga. /W.   -^Z, 190 A 


POUliAN, 


M:  a.  WILIilAMS,  CashiBB. 


YOUR  NO.         -DATE  OF  LETTCR 


?^/tf  7 


T^ 


IS 


(^r^if^Ur^fr 


^ 


0.Q^^ 


LL 


?.a.i 


1^ 


ni.dh.  (P. 


£P 


-/ 


aon 


//-io 


££ 

^ 


YOUR  NO. 

DATE  OF  LEUER. 

NAME 

AMOUNT 

x/4<^ 

-7^ 

,/-r 

l<)^d^w^,"^'^^->v/^ 

/ 

0 

o 

a(  6,  :x- 

\(^ 

<v.i.-)  a>a^^,^ 

7 

^ 

7<i- 

_ 

_ 

__. 

Fig.  ;?09. — Coi.lectiox  Report  axd  Reimittaxce   Letter. 


FORMS  FOR  BANKING  DKPART.MEN' 


329 


cept  that  the  columns  for  exchange  are  omitted.  The  ledger  account  of 
official  checks  is  kfpt  sometimes  on  the  general  and  sometimes  on  the  in- 
dividual ledger.  Unless  an  official  check  register  is  iised.  the  ledger 
account  should  give  the  detail  of  each  check  issued.  It  is  also  well  to 
enter  the  debits  on  this  account  o])i)oi5ite  the  original  credits,  as  in  the 
case  of  the  certified  elieck  ledger  aeeount  shown  in  figure  '2-2 1. 


RETURNED 

UNPAID 

Reason  checked,  if  known. 


Check   Sent 

Has  Been   Paid 

Will  Remit 

V/ill  Write 

As  Requested 

Refused 

Payment  Stopped 

Never    Pays    Drafts  1/ 

Not   Correct 

No  Attention 

For  Signature 

Fpr  Endorsement 

Not   Enough  Funds 

Fig.  210. — Coi.i.KtTiox   Retcrk  Slip. 

THE   BLANK  TRUST    CO  11  PA  NY 

Buffalo,   N.   Y.,'>W.9,/'?0(.. 
PLEASE  REPORT   Oil   THE  POLI.OV/nKi   COLLECT  IONS:- 


Central  trust  Co. 

Jacksomille.  Fla. 


No. 

Paye;- 

Sent 

Due 

Aiuourit        1 

2.:m  h- 

St—'U-^.t..^.  ^^-<>-  L}cLrxu:L 

"/^K 

i>, 

l^ai 

fo 

i 

1 

1 

Respectfully  yours, 

Brcvn  Smith,    Treasurer, 
Fio.  -'11. — CoLLECTiox  Tracer. 


TiHjBi€?ijVrTja!*^r  ©^m^^^f^^ 


2    l*^. 


<?^ 


L;_.fii.^_.^^ 


Fig.   J1.\— Okkui.m.   Check. 


^c-^^.    ^.-.. 


sso 


TRUST  COMPANIES. 


Drafts  on  Banks  and  Trust  Companies. 

Like  banks,  trust  companies  find  it  necessary  to  keep  an  account  with 
some  bank,  banker  or  trust  company  in  New  York  city.  The  larger  com- 
panies usually  have  several  such  accounts  in  New  York  and  also  carry 
accounts  in  Chicago  and  other  large  cities.  It  is  also  customary  to  carry 
accounts  with  one  or  more  local  institutions. 

Figure  213  shows  a  common  form  of  draft  against  such  an  account. 
Record  of  the  issue  of  such  drafts  is  kept  in  a  draft  register,  a  form  of 
which  is  shown  in  Figure  214.  In  large  institutions  a  separate  register 
is  kept  for  each  correspondent,  or  at  least  for  each  of  the  chief  corre- 
spondents.    The  smaller  institutions  often  use  one  register  only,  assign- 


_/g,v/..^.(7e^ 


Drafts  Drawn 


Fig.  213. — New  York  Draft. 


or/ "/vc  Xn..J-i.U  'K.iL-y^^O  a-.^/r  Oku.  ^^. 


^n 

loi^ 

,N      FAVOR      CF 

..»«, 

A^,our,r 

TOTAL 

" 

~- 

^2L^^L^^-t7 

T 

'h- 

1 

,  ! 

■■l:lHK>ir^r^,     . 

.i  ^K  -^--^ 

j.^.^-^--.--5^^t?C 

,1. 

1 

-P^^O  ^.^^- 

S...^  X    Ki-rr,^^ 

03 

i-'- 

^, , 

1 

3.' 

-Sr^nU   1^-3  ■ 

' 

05 

1 

h 

i 

1   ! 

1 1 

1 

Fig.  314. — Draft   Register. 

ing  the  necessary  number  of  pages  for  the  drafts  drawn  on  each  corre- 
spondent. Ledger  accounts  are  of  course  kept  with  each  bank  on  which 
drafts  are  drawn. 

"Wlien  a  customer  wishes  a  draft  on  New  York  or  other  city  he  makes 
application  to  the  draft  teller,  sometimes  verbally;  but  many  companies, 
especially  in  the  larger  cities,  require  that  he  present  his  application  in 
writing.     Figure  215  gives  a  form  for  such  an  application. 


Certificates  of  Deposit. 

Trust  companiejs  are  often  called  upon  to  issue  certificates  of 
deposit,  which  in  certain  cases  are  more  convenient  for  the  customer 
or  the  company,  or  both,  than  either  a  savings  or  a   checking  account. 


FORMS  FOR  BANKING  DEPARTMENT. 


331 


'These  certificates  usually  draw  interest,  and  are  not  subject  to  check. 
A  common  form  is  shown  in  Figure  21().  Interest  ceases  at  maturity, 
and  if  the  owner  of  the  certificate  does  not  wish  the  money  and 
wishes  interest  to  continue,  he  must  get  a  new  certificate.  Some  com- 
})anies  issue  special  certificates  of  deposit  which  bear  interest  under 
■certain  conditions  until   paid,  much  like  a   savings  account.     Certificates 


Form  No     17t 


to  the  order  of: 


The  Merchants'  Loan  &  Trust  Company. 

Chicago, ^2..kv: ,^.  /  ,-rr..../poA 

Draft  on_\  '  ^^^UAf^Jd^-rK wanttd 


Cln^^u>-^  <^^>OfC 


Purchased  by. 


'^^■^Unfv. 


'XL  WxrZl^^^ 


^ll^o_ 


I'm.  2\:i. — .Vi'i'i.iL.vnoN  loit  DitviT. 


'iLL. 


LitchfieidBank&Trust  Co. 


-yyJjAJiJ^^ 


^'rS^ij  (Jkoo°A_ 


^ 


Fig.  2\Ct. — CKHTintATi:  oi    Dm 


arc  sometimes  issued  which  do  not  draw  interest:  and  some  certificates 
are  payable  on  demand,  while  others  are  payable  on  or  after  a  certain 
date. 

If  the  number  of  certificates  issued  is  small,  the  record  of  their 
issue  is  often  kept  only  on  the  certificate  stubs  and  in  the  general  ledger. 
It  is  more  common,  however,  to  use  a  certificate  of  deposit  retjister.     A 


3S2 


TRUST  COMPANIES. 


number  of  forms  of  this  record  are  in  use,  varying  in  the  amount  of 
detail  given.  The  simplest  form  contains  columns  for  the  number  of 
the  certificate,  date  of  issue,  payee,  amount  and  date  of  payment. 
Figure  217  shows  a  longer  form  in  common  use.  Figure  218  shows  a 
form  of  register  designed  to  keep  the  detail  of  the  account  so  that  the 
general  ledger  account  need  show  only  the  total  debits  and  credits  for 
each  day.  Whatever  form  of  register  be  used,  the  date  of  payment  of 
each  certificate   should  be   promptly   entered   in  the   register. 

Companies  which  are  partial  to  the  card  form  of  records  use  cards 
for  the  registering   of  certificates   of  deposit   and  show   in  the   general 

Certificate  of  Deposit  Register. 


DATE 

DEPOSITED   BV 

«r«.£  ,.  T«.  o«,«  ., 

r"' 

.MO.,T 

■"" 

1:7^ 

::ik 

~ 

Brought  Fortaard, 

00 

01 

02 

03 

04 

05 

06 

07 

08 

09 

10 

11 

- 

_ 

Fig.  217. — Certificate  of  Deposit  Register. 

Certif  gate  of  Deposit  Register 


Fig.  218. — Certificate  of  Deposit  Rfgister. 

journal  or  the  general  ledger,  or  both,  the  names  and  numbers  of  certifi- 
cates issued  and  of  certificates  paid.  Figure  219  shows  such  a  card 
record.  The  interest  record  is  kept  on  the  back  of  the  card,  the  headings' 
of  the  columns  being  Number,  Date,  Amount  and  To,  the  latter  heading 
referring  to  the  date  to  which  interest  is  paid.  The  cards  are  filed 
alphabetically  according  to  the  names  of  the  payees. 


Certified  Checks. 

Like   banks,   trust   companies    are   often    called   upon    to   certify   the 
checks  of  depositors,  the  amount  of  this  work  varying  with  the  customs 


FORMS  FOR  HANKING  DEPARTMENT. 


333 


of  different  communities,  and  being  greater  in  the  large  cities.  The 
certification  is  usually  done  by  the  paying  teller,  but  is  often  delegated 
to  othrrs.  In  some  com})anies  it  is  done  only  by  an  official,  and  in  some 
<;ases  this  duty  is  performed  by  the  bookkeeper  in  whose  ledger  is  car- 
ried the  account  whose  check  is  certified.  A  rubber  stamp  is  generally 
used  for  certifying  checks,  although  it  is  sufficient  to  write  across  the 
f;icc  of  the  cImcU  the  word  "'fi  rtificd,"  folhnvfd  bv  tin-  drile  and  the  official 


NAME     lUoiii-r  ^.    (K^O^\.^ 

, 

ADDRESS       a.  in       [tO^     ^..       <vi^^CL^.O^i±'^^,      O, 

Numb«r 

Date  ls*ued 

rimn 

R.t« 

Amount 

Data   Surrand. 

3)+>s-^ 

CUL\  1 

/•v,6 

//^-^cs. 

ij    ^r, 

(p^O 

^ 

7 

.'6 

3  n  fe  /  f 

£; 

n 

iqc{. 

3  ■K.o<ri. 

3% 

(oOC 

cJ 

1 

1 

r 

1 

1 

1 

1 

! 

1 

■ 

i 

;| 

r 

1 

1 

1 

1 , 

i! 

•          1 

Fig.  219.— Card  Record  of  Certificatfs  of  I")ri'osiT. 


E.Vi'  TO  THe!^  oAd  ER 


?f^ 


'\ 


I'ui.    -'.'(I. — Ckhtifiki)  Ciir.cK. 


signature  of  the  ))erson  m'Ijo  certifies.  Figure  '2'IQ  shows  a  check  cer- 
tified by  tlic  use  of  a  common  form  of  rubber  stamp.  Other  forms  used 
are  "Good  vhen  properly  endorsed"  and,  "Accepted;  payable  through 
clearing-house;"  tlie  latttr  form  recognizing  the  fact  that  the  certifica- 
tion of  the  check  is  equivalent  to  the  acceptance  of  a  draft  drawn  upon 
the  bank  by   its  customer. 

There   are   two.  general    methods    in    vogue    for   keeping   account   of 
certified  checks.     One  is  by  the  use  of  a  certified  check  register,  a  form 


834  TRUST   COMPANIES. 

of  which  is  shown  in  Figure  221.  The  checks  are  entered  on  this  reg- 
ister as  they  are  certified,  and  at  the  close  of  the  day  the  bookkeeper 
credits  the  certified  check  account  with  the  total  amount  of  checks  certi- 
fied during  the  day,  each  separate  check  being  charged  on  the  individual 
books  against  the  account  on  which  it  is  drawn.  As  his  authority  for 
such  charges  to  the  accounts,  the  individual  bookkeeper  receives  from 
the  teller  who  certifies  a  special  debit  slip  such  as  is  shown  in  Figure 
222.  When  the  cliecks  come  in  for  payment,  they  are  charged  on  the 
certified  check  account,  and  the  date  of  payment  is  entered  in  the  last 
column  of  the  register. 

The  other  method  is  to  dispense  with  the  use  of  the  register,  and  to 
keep  the  detail  of  checks  certified  in  a  special  ledger  account,  such  as 
that  shown  in  Figure  223,  or  that  in  Figure  224.  In  the  account  shown 
in  Figure  223,  both  credits  and  debits  are  entered  in  chronological  order 
as  received  by  the  bookkeeper,  and  a  check  mark  is  made  before 
each  credit  item  as  its  corresponding  debit  is  entered,  so  that  the  un- 
checked credits  show  what  certified  checks  are  outstanding  at  any  time. 
In  the  account  shown  in  Figure  224,  the  credits  are  entered  in  chrono- 
logical order,  but  the  debits  are  entered  opposite  the  original  credit  of 
each  item,  so  that  the  outstanding  checks  are  found  by  noting  what 
credits  have  no  debit  entries  opposite  them. 

Record   of   Expe-nses. 

It  is  important  that  the  expenses  of  a  trust  company  be  not  only 
recorded  as  to  the  total,  which  is  shown  by  the  general  ledger  account,- 
but  that  the  distribution  of  the  account  for  different  kinds  of  expense 
be  shown.  For  this  purpose  an  expense  voucher  record,  such  as  that 
shown  in  Figure  225,  is  useful.  The  left  side  of  the  record  shows  the 
detail  of  each  voucher,  while  the  remaining  part  shows  the  distribution 
according  to  different  kinds  of  expense.  In  a  large  company  having  sev- 
eral departments,  the  distribution  by  departments  is  also  shown.  It  is 
also  useful  to  provide  for  credits  to  expense  account,  which  may  occur 
through  errors,  rebates,  etc.  Figure  226  shows  the  right  page  of  a  form 
used  by  a  large  company  for  these  two  purposes.  Figure  225  being  the 
left  page  of  the  same  form.  This  record  is  of  course  based  on  the  as- 
sumption that  the  voucher  system  for  expense  items  is  used,  this  practice 
being  a  growing  one  among  the  best  companies. 

Various  methods  of  handling  the  company's  payroll  are  in  use. 
Some  companies  pay  salaries  by  checks,  the  endorsements  of  which  pro- 
vide receipts  from  all  employees.  This  method  is  open  to  the  objection 
that  the  salary  received  by  each  employee  becomes  a  matter  of  common 
knowledge,  which  is  often  imdesirable.  The  method  of  paying  in  cash, 
and  taking  receipts  on  a  pay-roll  book  in  which  the  names  of  employee* 
are  written  in  alphabetical  order  for  each  pay-roll,  is  open  to  the  same 
objection,  though  used  by  some  companies.  There  are  companies  which 
do  not  consider  it  necessary  to  take  receipts  for  salaries.     The  most  sat- 


FORMS  FOR  BANKIXG  DEPARTMENT. 


335- 


ja.v^«.  ■>.<.  ■b-w^O: 


TO  ROM  PATAMJ 


.Ap%^-^. 


'^ 


Sv^ 


M  r"!'*  - 


r/'lU^k  1  (3rr^^ 


a^t/.^  ax>.v^^^iZ^ 


.»3lJSiA.4i. 


■4^AV  gAA.rf-<g.. 


'i'Mt.r 


Fig.  221. — Cf.htii  u:n  Chkck   Register. 


Charge  AccL 


t'Vi .  o^-M-^^  ,c- 


x\jeA~^     >(/U  0^aA-^^  -CYv 


.$n^^- 


Certired  Check,  /o  o«fc, «/  c/\<r^:^ -^^^^  '^"^  ^t>.. 


^7        Vc3c~r 


Fig.  222. — Dehit  .Slip  iok  Check  Certikieu. 


Jct,a, 


.^..t   -•     U\L..^    '.^3 


^i^'s/i '  c.^'.- 


ft  tt  ^AtlftjfUr.  'r^il 


tm 


■V^X  A><.b'     .^zi. 


;^ 


±— t 


Klu.  :J-'3.— Cehtikiei)  Checks   I.eih.er   AtcinsT. 


•HIT        *»?£ 


r^^ytt^^?^ 


^ 


u/tfa. 


>ma,v^ 


Fig.  ^-24. — Certified  Checks  I.EiKiEK   Accocxt. 


336 


TRUST  COMPANIES. 


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FORMS  FOR   BAXKIN'G  DEPARTMENT.  337 

isfactory  raetliod  seems  to  be  to  pay  in  cash,  and  take  receipts  in  an 
ordinary  journal-ruled  book,  in  which  a  separate  page  is  devoted  to 
each  employee.  The  book  should  have  an  index — preferably  a  marginal 
index.  At  the  top  of  each  page  are  written  or  i)rinted  some  such  words 
as  these: — "Received  from  The  Blank  Trust  Company  the  amounts  set 
opposite  my  several  signatures  below,  in  full  ])ayment  of  my  salary  to 
the  dates  sliown."  On  each  line  is  written  the  date  of  the  pay-day, 
and  the  amount  due  the  employee  to  such  date.  It  is  a  convenience  to 
have  the  pages  numbered,  and  in  getting  the  pay-roll  ready  for  the 
paying  teller,  the  disbursing  officer  writes  on  pay-roll  envelopes  the 
page  number  and  the  amount  due.  After  the  teller  has  placed  in  each 
envelope  the  amount  of  cash  called  for  on  its  face,  the  disbursing  officer 
may,  if  he  chooses,  turn  to  the  pages  indicated  and  write  on  each  en- 
velope the  name  of  the  jierson  who  is  to  receive  it.  This  method  saves 
the  trouble  of  preparing  for  the  teller  a  list  of  the  amounts  of  each 
denomination  of  currency  or  coin  needed  for  the  pay-roll.  The  dis- 
bursing officer  simply  hands  to  the  paying  teller  a  voucher  for  the  total 
amount  of  cash  needed,  with  the  envelopes  showing  the  separate 
amounts. 

For  customers  who  wish  cash  prepared  for  their  pay-rolls,  a  pay-roll 
slip  like  that  sho^vn  in  Figure  227  is  provided,  on  which  is  shown  the 
amount  of  each  denomination  wanted. 

Records  of  the  Supply  Department. 

An  important  task  is  that  of  looking  after  the  supplies  of  various 
kinds — records,  forms,  pens,  ink,  etc.  In  the  large  companies  a  good 
many  thousands  of  dollars  are  expended  for  such  things  each  year,  and 
a  regular  department  is  organized  to  care  for  the  work.  It  is  necessary 
to  have  a  sufficient  sui)ply  of  each  article  always  on  hand,  to  buy  in 
quantities  that  will  insure  good  rates;  and  yet  to  avoid  loading  the 
expense  account  for  any  one  year  M'ith  the  cost  of  supplies  for  sev- 
eral years  ahead.  In  a  small  company  the  problem  is  comparatively 
simjile.  and  occasional  inventories  under  the  direction  of  a  watch- 
ful official  are  all  that  is  needed.  Large  companies  with  several  de- 
partments require  a  careful  system.  The  buying  is  generally  done 
by  one  of  the  junior  officers,  who  has  charge  of  the  department.  Each 
iitw  form  as  ordered  is  given  a  form  number,  by  which  it  is  there- 
after known.  When  sui)plies  are  received  from  the' printer  by  the  sup- 
ply clerk,  he  makes  a  record  of  same  on  the  left  side  of  the  card  form 
shown  in  Figure  228.  The  date  of  receipt,  the  party  from  whom  pur- 
chased, the  quantity  and  the  price  are  shown.  These  cards  are  filed  in 
a  case,  in  which  sections  are  set  off  by  index  cards  for  forms  of  each 
department  and  for  general  forms;  and  the  cards  are  arranged  alpha- 
betically in  each  section.  Supplies  are  delivered  to  the  various  workers 
only  on  written   requisitions;   and   from  these   requisitions   record  of  the 


338 


TRUST  COMPANIES. 


The  Security    p^^y  roll  slip 
Trust  Co 


^c^-  /^) 


/QO/j? 


rBJL^t  '^(J^Y-rsn-.rr^ 


CURRENCY 

•         / 

ooo 

/ 

vTOO 

&  O  0 

0^1. 

COIN 

k  \ 

^7 

Ho 

(5"0 

■s 

i^ 

PENNIFS 

^   1 

TOTAl 

•     3 

"l^io 

J£A 

Fig.  227.— Payroll  Slip. 


A.A.'t'JiJ^skr 

c    ^7 

(Bcii>4- 

DISTRIBUTION                  B  1.             S  0                 T-C                 T-E                 1                 G                                                           SIZE .  cf  V  si 
,    O  STOCK                                                                                                                   FROM  STOCK                                                                            BALANCt 

.           B.„,.,  Of 

r-i.,: 

Uch 

a..n„,y 

P«.  M 

CO..           II 

0... 

To 

Q-Mi., 

c..- 

O.H.M 

^W 

d  x(Pi..a. 

10 

llV 

lo-U 

70?- 

7 

D(^ 

•^t"? 

pf 

'fCC. 

2oo 

■     ^/fOO 

M. 

-il.li 

oToo 

^3no 

^  y' 

... 

' 

._. 

" 

-- 

' 

"' 

i_L 

11 

•<n 

Fig.  228. — Record  of  SuppLres. 


FORMS   roil    IJANKIXG   DEPARTMENT.  339 

withdrawal  of  supplies  is  made  on  the  record  card,  Figure  228,  on  the 
right  side  under  the  heading  "From  stock."  The  amount  of  the  supply 
remaining  is  shown  in  the  "On  hand"  column.  The  records  thus  show 
at  all  times  the  amount  on  hand  of  any  given  article.  They  also  furnish 
a  basis  for  estimating  the  necessary  size  of  orders  for  the  next  year. 
Scrap-books  are  kept  in  which  are  pasted  two  copies  of  each  new  form 
as  issued.  The  number  97  after  the  word  "sample"  at  the  top  of 
Figure  228  refers  to  the  page  in  the  scrap-book  on  which  samples  of 
the  form  are  pasted. 


CHAPTER.  X. 
FORMS  AND  RECORDS  FOR  THE  SAVINGS  DEPARTMENT. 

THE  savings  department  has  come  to  be  one  of  the  most  important 
departments  of  trust  companies,  particularly  in  communities 
where  the  savings  hanks  have  not  had  great  development,  and  in 
many  cases  furnishes  the  largest  part  of  the  business.  The  records  of 
this  department  are  comparatively  simple;  and  since  the  deposits  are  not 
as  a  rule  active,  a  small  clerical  force  can  readily  handle  a  large  number 
of   savings  accounts. 

The  forms  and  records  used  are  practically  the  same  as  those  em- 
ployed by  the  regular  savings  banks.  For  a  very  full  treatment  of 
printed  savings  bank  forms,  based  on  samples  furnished  by  savings 
banks  from  all  over  the  country,  the  reader  is  referred  to  a  compilation 
of  savings  bank  forms  issued  in  June,  1906,  by  the  Savings  Bank  Section 
of  The  American   Bankers'   Association. 

Opening  an  Account. 

When  a  person  wishes  to  open  a  savings  account,  assuming  him  to 
have  been  properly  identified,  the  first  thing  necessary  is  to  have  him 
place  his  signature  on  the  signature  card  as  a  means  of  identification  in 
futxire  transactions.  Formerly  signature  books  were  used,  and  there  are 
a  few  companies  which  still  use  them;  but  the  advantages  of  cards  for 
this  purpose  are  so  many  that  their  use  is  becoming  nearly  universal. 
A  few  companies  use  both  the  book  and  the  cards,  keeping  the  former 
for  permanent  record,  and  using  the  cards  for  daily  business.  Figure 
230  shows  a  simple  form  of  signature  card,  whose  size  is  Sx5  inches. 
A  more  elaborate  form  is  shown  in  Figure  231.  The  amount  of  in- 
formation called  for  on  the  card  varies  greatly,  according  to  the  policies 
of  the  officers  and  local  circumstances.  Besides  the  signature,  the  items 
always  included  are  the  address,  the  number  of  the  account  and  the  date 
on  which  the  account  was  opened.  Among  the  other  items  of  informa- 
tion often  called  for  are  the  following:  Both  home  and  business  ad- 
dress; occupation;  employer's  name;  age,  or  date  of  birth;  birthplace; 
married  or  unmarried;  father's  name  or  mother's  name,  or  both,  some- 
times the  whole  name  being  asked  for,  and  sometimes  the  first  name 
only;  husband's  or  wife's  name;  maiden  name  (if  a  married  woman); 
native  state;  nationality;  introduced  by;  source  of  account;  remarks. 
A  few  companies  require  the  signature  to  be  witnessed.  The  majority 
of  signature  cards  contain  a  simple  agreement  like  that  shown  in  Figure 
230,  but  a  few  contain  q'lite  elaborate  contracts  to  abide  by  the  rules 
and  regulations,  etc.,  and  a  few  provide  no  agreement  whatever,  assum- 
ing thai  the  opening  of  the   account   and  the   leaving  of   the  signature 


I'ORMS  FOR  SAVINGS  DEPARTMKNT.  341 

imply  :iuch  agrceiDLiit.  As  to  the  matter  of  what  is  needed  on  the  card 
in  the  way  of  information  for  future  identification,  it  is  evident  that 
there  is  considerable  difference  of  opinion.  If  the  account  is  an  active 
one,  there  can  be  little  question  about  identification.  If,  however,  the 
account  once  opened  remains  dormant  for  a  period  of,  say,  ten  years, 
the  signature  alone  will  hardly  be  a  satisfactory  means  of  identification, 


I  hereby  agree  to  the  reflations  of 
The  Blank  Trust  Co,  governing  savings  accounts . 


sign  btrt 

^.>.-i:y^^L  \Hc  ...1  ,^.(P)(..^x^^U 

a 

KUrrta 

m  J'  '-^cLT'^^i^  '&lr^ 

J- 


JAN  a  - 190/ 


Fig.  J30. — SioKATruK  r.\iii). 


I  hereby  agree  to  the  Rules  and  By-laws  of 

TEE  BLAITK  TRUST  COMPAIT?     governing  savings 
accounts. 


vo.nyj 


TTama     UCLt'^^cH^    ^x^-jxAyU   dd.OUl^,/L' 


AAATmnn     I  /f  3     Uo^r-KiLir  ^ 


Mother  »s  maiden  nmmt>     \K.aAa^    L^'j(JUrrr,''(-f      

Date  JAN  ^  -  1907  ^^^^^       '— '      '^' 


inasmuch  as  a  person's  signature  is  apt  to  change  mat(  rially  within  a 
few  years.  In  such  cases  it  is  undoubtedly  of  advantage  for  the  com- 
pany to  be  in  possession  of  information  of  a  private  character  concern- 
ing which  an  outsider  is  not  apt  to  be  posted.  In  taking  the  signature 
of  a  woman,  the  teller  should  always  learn  whether  the  title  is  Miss  or 
Mrs.,  and  note  the  fact  on  the  card,  if  the  signature  itself  does  not  show 
it. 


342 


TRUST   COMPANIES. 


The  signature  cards  are  filed  in  the  drawers  of  a  cabinet  which  is 
placed  where  it  will  be  easy  of  access  by  the  tellers  and  the  savings  book- 
keepers. They  may  be  filed  either  numerically  according  to  the  num- 
bers of  the  accounts,  or  alphabetically  according  to  the  names  of  the 
depositors.  If  filed  alphabetically,  they  serve  as  an  index  to  accounts 
(which  otherwise  must  be  provided  in  a  separate  book  or  set  of  cards), 
thus  saving  uuich  time  and  vpork.  If  this  plan  is  adopted,  however,  great 
care  must  be  exercised  to  keep  the  list  always  complete,  and  to  remove 
the  cards  of  closed  accounts  promptly  and  place  them  in  a  separate  file. 
It  often  happens  that  the  required  signature  cannot  be  obtained  at  the 
time  the  account  is  opened,  and  it  is  therefore  necessary,  in  order  to  keep 
the  card  list  complete  as  an  index,  to  have  a  temporary  card  to  place  in 
the  files  imtil  the  regular  signature  card  is  completed.  Figure  232 
shows  such  a  "dunmiy  signature  card." 


PnOCURC   SIGNATURE  OF 


^Xc-Lsii: 


i_L^ 


^c-n 


l< 


^L^':'l 


REMARKS 


gig    "u^-f   gLo"^  S^f 


CUxf.   ,  v^o^xi^A 


jL.,  a  ijk.j^,^ 


NO.  OF  BOOK- 


Xi  3^6" 


JAN  9  -  19Q7 


Fig.  232. — Dummy  Signature  Card. 


Savings  accounts  are  often  opened  in  the  names  of  two  persons, 
either  of  whom  is  to  be  permitted  to  withdraw  the  funds.  In  such  cases, 
both  signatures  must  of  course  appear  on  the  signature  card,  together 
with  the  notation  that  either  may  draw.  This  notation  is  also  placed  on 
the  ledger  page  and  on  the  pass-book.  Joint  accounts  are  also  opened 
with  tlie  agreement  that  in  case  of  the  death  of  either  of  the  parties  the 
account  is  to  belong  to  the  survivor. 

For  the  signatures  pertaining  to  such  joint  accounts,  some  companies 
use  the  ordinary  signature  card  and  make  upon  it  the  necessary  nota- 
tion, either  with  pen  or  with  a  rubber  stamp,  while  others  provide  a 
special  card.  Some  consider  that  a  brief  notation  answers  the  purpose, 
forms  used  being  these:  "Subject  to  the  order  of  either  and  the  sur- 
vivor"; "joint  account";  "to  be  drawn  by  either  or  the  survivor";  "either 


FORMS  FOR  SAVINGS  DEPARTMENT.  343 

may  draw';  "balance  at  death  of  eitlicr  to  l)elong  to  and  be  paid  to  the 
survivor."  Others  deem  it  better  to  have  on  the  card  a  more  formal  con- 
tract, such  as  the  following:  "Wc,  the  undersigned,  hereby  declare  that 
■we  are  the  joint  owners,  in  joint  tenancy,  of  the  money  that  is  now,  or 
may  hereafter  be,  deposited  in  the  Blank  Trust  Company  in  our  joint 
names,  as  signed  hereto,  and  of  any  interest  that  may  accrue  or  be 
credited  thereto;  and  that  either  of  us  may  draw  and  receipt  for  the 
whole  or  any  part  thereof,  either  before  or  after  the  death  of  the  other; 
and  that  at  the  death  of  cither  of  us  the  survivor  shall  be  the  absolute 
owner  of  the  balance  then  due  the  account,  as  surviving  joint  tenant,  and 
is  hereby  authorized  to  receive  the  same  from  said  company  on  his  in- 
dividual check  or  order  therefor."  An  interesting  discussion  of  the 
company's  liability  in  the  case  of  such  an  account,  written  by  Thomas 
B.  Paton,  and  tntitled  "Legal  Aspects  of  Payment  to  Survivor  of  Joint 
Account,"  is  found  in  the  proceedings  of  the  Savings  Bank  Section  of 
the  American  Bankers'  Association  for  I906. 

\Mien  an  account  is  opened  in  the  name  of  a  society  or  corporation, 
the  signature  card  must  contain  the  signatures  of  the  officer  or  officers 
authorized  to  draw;  and  it  is  necessary  also  to  have  a  certificate  that 
such  officers  have  been  given  such  authority  in  due  form.  The  custom 
with  some  companies  is  to  take  the  signatures  on  a  blank  signature  card 
which  is  placed  in  the  regular  files,  and  to  have  the  certificate  on  a 
separate   form,  one  of  which  reads  as   follows: 

"This  is  to  certify  that  at  a meeting  of of  the 

of held 190 ,  Mr ,  whose 

signature  appears  below,  was  duly  elected of  said  company, 

and  as  such  is  hereby  authorized  to  draw  funds  from  and  to  give  in- 
structions concerning  the  account  of  said  company  with  The  Blank 
Trust   Company.     This  authority  to  remain   in   full   force  until   revoked 

by  action  of  the of  said  company,  and  written  notice  thereof 

given. 


Signature  of 


This  certificate  must  be  made  by  an  official  other  than  the  person  author- 
ized to  withdraw  funds." 

Some  companies  use  a  special  signature  card  for  these  accounts,  the 
signatures  ustially  ap]>earing  on  the  face,  and  the  certificate  on  the 
back  of  the  card. 

After  an  account  has  been  ojiened,  it  sometimes  happens  that  the 
owner  wishes  to  give  to  another  person  authority  to  withdraw  funds  from 
his  account  for  a  time,  or  perhaps  to  become  permanently  a  joint  owner 
of  tb.e  account.     In  the  former  case,  an  order  like  that  shown  in  Figure 


34-4  TRUST   COMPANIES. 

233  answers  the  purpose  well.  If  the  account  is  to  be  permanently 
changed  to  a  joint  account,  many  companies  prefer  to  close  the  old  ac- 
count and  open  a  new  one,  in  regular  form;  but  some  provide  forms  like 
that  in  Figure  234,  to  be  signed  by  the  owner  of  the  account  authorizing 
the  cliange. 

The   Depositor's   Pass-Book. 

After  having  filled  out  tlie  signature  card  and   deposited  his  funds^, 
the  customer  is  given  a  pass-book,  a  common  form  of  the  inner  pages  of 

CERTIFICATE  OF  AUTHORITY  TO   MOVE    INDIVIDUAL  OR   PARTNERSHIP    FUNDS 


Hu  u  to  (Smtfg. 


Ju^-:rw  (c^a^A^A./^^.Ov 


oSLV^J^- 


°^B^ 


i  OECeivEO  BY  YOJ. 


No.   ^4^^   V*' ^         ' WITH   rue     BlSnfc     TrUBt     Co'.       this  authority  to  net.*™  IN  FULt  FORCE  UNTIL    WRITTEN 


Fui.  233. — Certificate   of  Authority  to  Draw   Fuxds. 
Real  Estate  Trust  Company  authority  for  joint  controu 


Jjou  arc  bcrcbB  Sutborljce    to  i 

7<U 


...(A-^Hcrj  >S...i-zl 


itanox.  Bunmo  ure  or  both,  aho  the  balance  to  selonq  to  and  be  payablb  ^_^ 

f  iOTM  PARTIES,  IN  WRlTlHO,  AND  UPON  PRE8ENTATT0N  OF  THE  PASS  BOOK. 


Fig.  23\. — Authority  for  Joixt  Coxtrol. 

which  is  shown  in  Figure  23.5.  Some  pass-books  have  another  column 
for  the  entry  of  interest ;  but  the  more  common  custom  is  to  use  the  form 
shown  in  the  figure,  and  either  to  enter  the  interest  in  red  ink  or  use  a 
lubber  stamp  for  the  interest  entry,  as  shown  in  the  figure.  Where 
interest  in  credited  semi-annually,  as  is  the  usual  case,  different  colored 
inks  are  used  in  stamping  the  two  interest  entries  for  each  year;  as  for 
example,  red  ink  for  the  January  interest  and  blue  ink  for  the  July 
interest.  Some  companies  pay  interest  in  April  and  October.  The  inner 
pages  of  the  pass-book  are  usually  cut  off  along  the  line  above  the 
words  "Date."  "Withdrawn,"  etc.  in  Figure  235,  so  that  the  headings 
of  the  first  and  last  account  pages  may  be  seen,  at  whatever  pagt  the 
book  is  opened.     The  rules  and  regulations  of  the  company  are  usually 


FORMS  FOR  SAVINGS  DEPARTMEN  T 


345 


printed  on  the  first  or  last  page  or  the  cov<  r,  together  with  such  adver- 
tising matter  as  is  deemed  best.  The  depositor's  name  is  often  entered 
on  the  front  cover  as  w  11  as  on  the  inside  of  the  book;  but  customers 
often  dislike  this,  and  some  companies  therefore  omit  entering  the  name 
on  the  cover. 

Usage  differs  in  the  mattvr  of  requiring  savings  depositors  to  fill  out 
deposit  slips  with  their  deposits.  In  some  cities  all  trust  companies  re- 
quire such  deposit  slips,  one  form  of  which  is  shown  in  Figure  236, 
Other  forms  are  like  tlie  ordinary  commercial  deposit  slip,  with  the  ad- 


Tjte  Western  Rehervk  Trust  C< 


Withdrawt 

Drpoaitcd 

Balanc«- 

D.te 

Wilhdr.«rD 

Dei«.Mlwi 

bKl.Dce 

^ 

3 

IOC 

'or 

_ 

';Uv 

:^ 

>o 

S^no 

M^ 

,  1 

In 

1  1  c 

_ 

/»T 

3.qs 

3s>snQ 

~%:^. 

\-, 

1  c 

1  7p 

_ 

a<.^, 

1 

20 

■5;PvT 

'^^ 

-. 

i^n 

_ 

^k., 

,"A 

1  o 

(tfO 

_ 

f  c 

.cs- 

1 1  -^ 

_ 

' 

(i,,.. 

1 

1  0 

/.:•  v^ 

a.r  i« 

06 

Inl-resi 

2 

:|A 

/2  - 

-,^ 

Sni.L<^ 

1  O 

cA 

n.^ 

1 

1 Q 

2,\ 

c3 

n 

/as 

■:  r  -f 

2S 

^•,>?^ 

ic 

p-*;? 

7S 

'■  i. 

.^ 

cv-f 

:i 

-,    -, 

;,"r- 

SA 

1 1> 

/^ 

7  S 

>■.    , 

T, 

lo 

:;><rf 

?(' 

•s-o 

rs 

Ian.     1st 

)1 

nternf 

3 

<r/ 

•^-.r 

^a 

.,  , 

s 

-.7 

•fV'r  iV 

1  o 

■'i  r 

7^ 

?r> 

:ioc> 

20 

"^ 

Fig.  235. — Savings  Pass  Book. 


dition  of  the  number  of  the  pass-book.  In  other  places  the  use  of  deposit 
slips  is  entirely  done  away  with,  the  depositor  simply  handing  his  deposit 
to  the  teller,  who  enters  it  on  his  deposit  journal  and  on  the  pass-book. 

There  is  also  a  difference  of  usage  as  to  withdrawals  from  savings 
accounts,  a  few  companies  requiring  from  the  depositor  no  receipt  other 
than  tlic  entry  in  his  pass-book.  The  usual  custom,  however,  is  to  require 
the  signing  of  a  savings  withdrawal  slip  or  receipt,  two  forms  of  which 
arc  shown  in  Figures  t2.'?7  and  '2.'18.  Under  either  plan  the  p.i>s-l>ook 
must  always  be  presented  when  the  withdrawal  is  made.  Special  forms 
are  often   provided    for   cases   in   which   the   withdrawal   is   for   the   full 


346 


TRUST  COMPANIES. 


amount  of  the  account,  these  forms  differing  from  those  shown  chiefly 
in  the  addition  of  somi  such  words  as  "in  full  of  account"  or  "being  the 
full  amount  of  dci:)osits  and  interest  on  my  accoimt." 

Pass  Book  J^o.<^J.H-':r....  ( _. 

The  MERCHANTS'  Loan  &  Trist  Co. 

CREDIT  SAVINGS  ACCOUNT  OF 


I 


iJ^ame)  Cy.(X.Lr\r<:K...^..^: 


Money... 
Checks 


/a^' 


Fig.  236. — Deposit  Slip  for  Savings  Accoukt. 


WITHDRAWAL  SLIP 
THE  NUMBER  IS  ON  THE  COVER  OF  YOUR  BOOK 


BOOK  No. 


T+SI 


Wmn  THE  AUOUMT  You  W|»M  TO  Draw  Out  in  PLAIN   FI0URE3. 

OOLIARS    UNOIR  T»£  WOnOS  "DOLLARS."  C(HT8  UNOER  THE  WORD  "COTTS  ' 


$--^f 


^ 


ST    LOUIS,. 


d^y.. 


^ 


'^ 


RECEIVED  OF 

COMMONWEALTH  TRUST  COMPANY 
SAVINGS  DEPARTMENT 


SlONATVKE- 


Present  AtioKE! 


aJpi 


t 


"^•-ii-wL^-rk 


Ww:.'  ^-j-'      v^'--iT.-,wu>'~-K 


SIC.  ex.  B« 


APPROVCO  B* 


Fig.  237. — Savings  Withdrawal  Slip. 


FORMS  FOR  SAVIXGS  DEPARTMENT.  317 

Savings  depositors  frequently  wisli  to  issue  orders  or  checks  against 
their  accounts,  and  this  is  usually  permitted,  although  care  must  be  exer- 
cised hst  the  account  he  used  as  a  regular  checking  account.     The  forms 

aAyr^o^   VoTTciTKw.  cx.bvkla.nd,  o .)tCv>>^.    '^ lool/. 

KKCKIVED  FROM    THE    RBSERVK   TUVtTT   COMPX.NY  »'^^."~ 


DOLXA.RS 


AKD  CHA.BOB  TO  MY  SAVDIOa  PAM  BOOK  No. 

37&H- 

Fig.  ^.'^8.— Savings 

DIAN 

^\• 

nnnit 

A\v.vi.  Si  IP. 

iXO.   3 

TRUST  COMPANY 

PITTSBURO.        jHCL-^r^/       I  0  ~  ii^p    { 


Kxc  TO  xnK  Ohukr  ok. 


a 


J^...vi^fc.,.C.>c/K 


JuyV-v>Xv-«y/(A^    — 


\__)  wnu;n  CHAinsE  TO  Saxtjcuu  AtMJOiTsrr  No._4j!p-ii-L 

^AAjtxULJ  CPcXfcx^^^^^ 


Fig.   :?3n. — Ciikck  or  Okdkr  ov    Savin(;s   Accoixt. 


iro.  <^6'^^  Hotlce  expires  _k^^jL^^:^_Z2^ 

I  hereby  give  notice  to  The  Blani  Trust  Company  that 
I  will,  at  my  option,  at  the  expiration  of  ^  <xxij 


^f- 


from  this  date,  draw  from  said  Company  %^00  — of  my 

deposit  number  34 / o   in  said  Company. 


I""lG.    -K).  —  NoTlCK    OK    WlTHDHAWAI.. 


Tised  for  this  purpose  are  much  like  an  ordinary  check,  with  the  addition 
■of  the  pass-book  number  and  a  notation  that  the  "pass-book  must  ac- 
company  this   order,   unless   left   at  the  bank."      Figure   -2^9   shows   such 


31S  TRUST   COMPANIES. 

an  order.  Some  companies  provide  a  special  form  of  order  where  the- 
withdrawal  is  for  the  full  amount  of  the  account.  It  is  often  required' 
that  such  orders  be  Avitnessed. 

The  ruh  s  of  many  companies  provide  that  withdrawals  from  savings 
accounts  may  not  be  made  except  after  written  notice,  which  must  be 
given  a  certain  time  in  advance.  This  time  varies  from  ten  to  ninety 
days  and  frequently  varies  with  the  amount  to  be  drawn.  The  notices 
are  riled  according  to  their  maturities,  and  the  withdrawal  must  be  made 
within  a  certain  period  (usually  ten  days  or  thirty  days)  after  such 
maturity,  or  a  new  notice  is  required.  Figures  210  and  2H  show  form* 
used  in  this  connection. 

ITotice   left   on  took  ntim"ber_Z4j!Ml  f or  f^ilil:: — 

at 

THE  BLAFrC  SAVINGS  AID  TRUST  COLIPAIY. 

This  notice  is  not  negotiable,  and  must  be 
presented  by  depositor  when  withdrawal  is  made. 


Date  of  Tiotiffft  Si^^±,  ^     190 Id_ 
Payable  Ocf.    ^     190  Jo. 


Or  within  ten  days  thereafter. 

Fig.  ;341. — Acknowledg^iext  of  Notice  of  Withdrawal. 

Savings  Journal. 

Record  of  the  day's  business  in  savings  deposits  and  withdrawals 
may  be  kept  by  the  bookkeeper  on  journals  or  scratchers  similar  to  those 
used  for  commercial  accounts;  as  for  example  that  shown  in  Figure  131. 

It  is  more  common,  however,  for  the  tellers  to  keep  journals  of 
savings  deposits  and  savings  withdrawals,  entering  a  memorandum 
of  each  transaction  as  it  occurs.  Figure  242  shows  a  form  of  this 
record  for  withdrawals.  As  will  be  seen,  each  entry  covers  the  number 
of  the  account,  the  name  of  the  depositor,  amount  of  the  withdrawal 
(or  deposit)  and  the  pass-book  balance  after  the  entry  of  the  item, 
together  with  any  memoranda  the  teller  may  wish  to  make.  The 
addition  of  the  pass-book  balance  is  a  valuable  feature,  making  it  pos- 
sible to  verify  the  pass-book  balance  with  that  of  the  ledger  without 
taking  the  time  to  consult  the  ledger  for  each  item  at  the  time  of  the 
transaction.  The  same  result  may  be  accomplished,  but  not  so  well,  by 
entering  the  pass-book  balance  on  the  deposit  slip  or  the  withdrawal  slip. 

In  case  the  business  is  small,  only  one  deposit  sheet  and  one  with- 
drawal sheet  are  used  for  each  day's  business,  or  for  several  days'  busi- 
ness, until  the  sheet  is  full.     In  large  companies,  however,  it  is  customary 


FORMS  TOR  SAVIN'GS  DEPARTMENT. 


SW 


'to  use  one  sheet  for  the  accounts  in  each  of  the  several  ledgers,  or  each 
division  of  the  cards,  if  card  ledgers  are  used.  This  is  partly  for  con- 
venience in  posting,  and  partly  in  order  to  keep  the  total  deposits  and 
withdrawals  for  Hie  day  in  each  ledger  separate,  so  that  trial  balanct  s 
of  each  ledger  may  be  kept. 

Figure  213  shows  anotlier  style  of  savings  journal,  in  which  a 
separate  column  is  provided  for  entry  of  the  items  in  each  ledger  or  each 
subdivision  of  the  cards.  The  footings  of  the  several  columns  show  the 
total  deposits  (or  withdrawals,  as  the  case  may  be)  for  the  day  for  the 
different  ledgers  or  card  subdivisions. 

SA\1Na8  "VS'ITHDRAWALS. 


±-^- 


-^i<^^ 


^)(U4.    .C.^^^,    .S 


'>1  7.  ^<i-t. 


UiA 


■v^  ^'•^. 


EH 


l-'iG.   J\2. — Savin(.s    W  itiidkawai    .huitSAi. 


SAVINGS    JOURNAL 


-.. 



«::> 

~^ 

"n 

.. 

■■■■ 

ws  " 

,_,, 

1 

,. 

i 

T-r 

1    1 

;  ,.i,^ 

'.-U-,,     ;    ^v..»^r 

., 

,'■ 

_, . 

., . 

.•C,^,*.i,:.^..  ^?»,.^ 

_j      !     !    p .  »;--.■ 

. .    '  . 

,, 

1 

I-tI" 

,f.   ...    :    0(-/.>' 

-r 

.:  ,.-    .S  ...,.,f^ 

.><u 

'  S-' 

! 

. 

1 

1    ] 

;         ' 

r 

' 

i      1 

'    1 

; 

1 

1 

! 

1 

! 

1 

J 

1       1 

Fig.  -21^. — S.vvixgs  Ukposit  Joirvai.. 


Figure  241'  shows  a  record  of  deposits  similar  to  the  form  sliown  in 
Figure  242,  but  with  the  addition  of  columns  for  proof  of  postings.  The 
teller,  at  the  lime  of  the  transaction,  rills  out  all  the  columns  to  "Pass- 
liook  Bilancc"  inclusive.  The  bookkeeper  posts  to  the  ledgers  from 
this  sheet;  and,  after  making  the  posting,  enters,  in  the  columns  shown, 
the  old  and  new  balances  of  each  account.  In  doing  this  he  notes  any 
case  in  which  tlie  new  balance  shown  by  the  ledger  differs  from  the  pass- 
book balance  as  entered  bv  the  teller.  In  this  way  difl\rences  between 
the  two  books  are  inunediately  detected,  and  the  pass-books  are  called  in 
for  recti Hc.-'tion.  When  the  posting  is  completed,  the  footing  of  the 
column  showing  tlie  amounts  of  dejiosits  is  entered  in  the  "Old  Balance" 


.^.50 


TRUST   COMPANIES. 


cohimn,  and  if  the  postings  and  extensions  are  correct,  the  "Old  Balance" 
and  "New  Balance"  columns  should  agree  in  footings.  With  the  with- 
drawal sheet  the  process  is  the  same,  except  that  the  footing  of  the  amount 
column  is  added  to  the  "New  Balance"  column.  In  the  systems  illus- 
trated in  fi'gures  2'k^,  2i>3  and  244,  the  sheets  for    deposits    and    with- 


SAVIUSS  OVttlTS.                      Ft JAN  121907. 

.-.<m..I^oc/ 

T.../.£c>.- 

Pr« 

. 

VISS 

^.AN.< 

x»... 

«..»,» 

'tSSS 

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. 

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, 

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., 

-, 

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a  <^'^,..^tt    <£u..;.(H 

,  _  . 

, 

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,,,, 

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PA 

f,fi 

. 

= 

— 

~ 

=~" 

"" 

~ 

' 

" 

1 

Fig.  344. — Savings  Jourxal,  with  Proof  of  Postix 


drawals  are  the  same  in  each  set,  except  for  the  headings  "Savings  De- 
posits" and  "Savings  Withdrawals"  respectively.  At  the  close  of  each 
year  or  each  half-year,  the  sheets  should  be  bound  in  permanent  shape, 
and  filed  in  the  vault. 

Savings  Ledgers. 

The  use  of  bound  books  for  savings  ledgers  is  fast  giving  way  to  tlie 
use  of  either  loose-leaf  ledgers  or  cards.  The  disadvantages  of  bound 
books  for  this  purpose  are  many.  They  soon  come  to  contain  many 
closed  accounts.  The  space  assigned  for  a  given  account  is  apt  to  be- 
come filled,  so  that  it  is  necessary  to  "carry  forward"  the  account  to  a 
new  page,  or  else  to  close  the  account  and  open  a  new  one  with  a  new 
number — a  troublesome  process  both  for  the  coinpany  and  for  the  de- 
positor. Where  bound  books  are  used,  provision  is  usually  made  on  each 
page  for  more  than  one  account,  the  number  varying  from  two  to  eight. 
The  ruling  does  not  differ  materially  from  that  used  in  the  loose-leaf 
and  card  ledgers  here  shown. 

Figure  24.')  sliows  the  form  of  loose-leaf  savings  ledger  that  is  most 
commonly   used.      Its  size,  including  binding  space,  is   l^Y^^dVi  inches. 


FORMS  FOR  SAVINGS  DEPARTMENT. 


351 


Some  companies  prefer  to  liave  the  balance  column  placed  between 
the  debit  and  credit  columns.  Whichever  plan  is  adopted,  there  is  a 
distinct  advantage  in  having  the  rulings  of  the  pass-books  and  of  the 
ledgers  exactly  the  same.  It  is  sometimes  considered  a  convenience  to 
provide  a  separate  column  for  interest  entries,  as  in  the  form  sho\vn  in 
Figure  246.  A  few  companies  figure  interest  on  each  transaction  rather 
than  on  the  balances,  crediting  interest  to  the  end  of  the  interest  period 
for  each  deposit,  and  charging  interest  similarly  for  each  withdrawal.  In 
such  cases  the  ledgers  are  ruled  to  provide   for  these  interest  computa- 


:24£ 


^^^ 


,JML. 


iz 


Fig.  245. — Ledger  for  Savings  Accoukt. 


-...T" 

"TS!^ 

.K«>.,T. 

.«^.C« 

INTBIMT 

««-,..«,.. 

^ 

','  c 

'C< 

L} 

1 

?r  ■" 

%     . 

1 

^ri^ 

'^-i 

o 

f^ 

Fig.  ~W. — Savings  I.kdgkh.  with  Tntfrest  Coi.i 


tions,  the  headings  of  the  columns  being  Date,  Interest  Balance,  In- 
terest Dr.,  Withdrawals,  Interest  Cr.,  Dejiosits,  Balance.  The  interest 
balance  is  kept  separate  until  the  end  of  the  period,  when  it  is  add<d  to 
the  balance  of  the  account.  Some  companies  have  adopted  the  practice 
of  taking  the  depositor's  signature  on  the  ledger  leaf,  which  also  con- 
tains other  descriptive  matter  usually  found  on  the  signature  card. 
Figure  247  shows  a  ledger  leaf  prepared  for  this  purpose. 

Card   ledgers    for   savings   accounts   are   extensively    used,    especially 
among  the  larger  companies,  the  form  of  the  card  ruling  having  the  same 


352 


TRUST  COMPANIES. 


variety  as  in  the  case  of  loose-leaf  ledgers.  The  most  common  form  is 
shown  in  Figure  248,  The  tab  at  the  top  of  the  card  shows  the  last 
figure  of  the  account  number,  the  position  of  the  tab  varying  with  the 
iiffure,  that  for  1  being  at  the  extreme  left,  as  shown  in  the  figure,  and 


ja  aoooTznt  wltb 
Sheet  Ho, L 


Book  Ho.cf7(^f 


I  hereliy  agree  to  the  Bylaws,  Rales  and  Regulations  of  this  tank 


Sign  here    Vx/wui4^  V 
1*]  S  M-  ekaXuAj-o-ot-l  OjA/  .     Blrthpla« 


Ooonpatlon 


(mo 


^ 


CLt  }La  x^y^ 


Birthplace. 
Kbther'B  maiden  name. 


5 


Date  i  Withdrawn  Jepoaltea  |  Balanoe  |  Bate  [  fflthdrawn  |  Deposited   Balanoe 


IM. 


L4^ 


m 


^14. 


ij-^  4i 


Fig.  x?47. — Savings  Ledger,  with   Depositor's  Signature. 

those  for  2.  S.  etc.,  being  at  measured  distances  to  the  right.  These  tabs 
are  for  convenience  in  picking  out  the  card  wanted.  The  cards  are 
arranged  in  numerical  order,  with  large  index  cards  for  each  even  hun- 


^ 


fWKJLA^ 


-- .  O^-vA^X/-^ 


24471 


DATE 

WITHDRAWN 

DEPOSITED 

BALANCE 

~ 

,  %L-^. 

3 

o(n 

/no 

/  O  O 

nxd 

vS- 

^o 

/  ^O 

X 

/ 

X  a  n 

3^a 

1^ 

/  2  ^ 

2.;^  vS" 

' 

llil^ 

l,st 

'yt 

nt-^r. 

2 

n  ^s■ 

2:i  q 

n^^ 

S,^i. 

1 

1   1  k 

(,  H- 

^  ^G 

^  ^ 

^ 

)    (o 

s-o 

3^6 

3  ^ 

^^, 

-LO 

X  O 

2~2~ 

3^6 

3    Cf 

Jan. 

ht 

'0/ 

n teres 

lo 

3  <S  2_ 

/,.   1 

4..Jk 

\ 

JU- 

H-o 

^^^7 

o  1 

_ 

Fig.  248. — Savings  Ledger  ix   Card  Form. 


rOR.MS  FOR  SAVINGS  DKFARTMKNT. 


353 


dred  numbers,  and  smalh  r  index  cards  for  each  even  ten  numbers.  For 
example,  the  card  shown  in  the  figure  would  follow  the  index  card 
/narked  70,  which  would  appear  in  its  proper  order  between  the  large 
index  cards  21,400  and  24,500.  The  cards  are  kept  sometimes  in  the 
drawers  of  a  cabinet,  and  sometimes  in  the  drawers  of  a  specially-pre- 
pared table  whose  top  is  made  in  movable  sections,  enabling  the  book- 
keeper to  place  a  section  just  at  the  side  of  the  card-drawer  on  which 
he  wishes  to  work.  During  the  process  of  posting  each  card  as  wanted 
is  removed  from  the  file,  the  entries  and  extension  are  made,  and  the  card 
is  then  returned  to  its  place.  A  proof  of  posting  may  be  taken  in  the 
same  manner  as  that  described  in  connection  with  Figure  244.  A  method 
rsed  for  proving  the    postings  on    the  adding    machine    is    as    follows. 


SAVINGS    LEDGER    TRIAL    BALANCE 
DATE  JAN  19  1907 


Li. 


2QtiiiI 


^2(A 


Q^ 


kli 


X2M20 


tMia 


tu 


iiaii 


/  ■?  J  OJ>'i 


LMklki. 


HtL 


aiie£2  2S 


ai. 


.^IL 


Lit 


-'lit.     I, 


-Haf.axck  Pace. 


Using  the  journal  as  a  guide,  the  cards  of  the  accounts  active  for  the 
■day  are  rtmoved  from  the  files,  temporary  cards  (of  different  colors  for 
accounts  having  credits  and  accounts  having  debits)  being  put  in  their 
plaois.  After  all  the  cards  are  removed  the  balances  sliown  on  them  are 
listrd  on  the  adding  machine.  The  postings  are  then  made,  and  a  ne\>- 
adding-machine  list  of  balances  is  taken.  To  the  latter  list  is  added  the 
total  of  the  witlidrawals  for  the  day,  and  to  the  former  list  the  total  of 
the  deposits:  whereupon  the  totals  will  agree  if  the  work  has  been  done 
correctly.  All  of  the  accounts  active  for  the  day  may  be  included  in 
one  such  proof,  or  a  separate  proof  may  be  taken  for,  say,  each  five 
thousand  accounts.  This  will  be  determined  by  the  method  used  in  the 
monthlv  trial  balances,  which  are  often  tak«  n  for  each  five  or  ten  thou- 
sand accounts  separately.     The  object  in  so  doing  is  to  lessen  the  ground 


354.  TRUST   COMPANIES. 

that  must  be  covered  in  searching  for  an  error,  search  being  necessary 
only  for  that  groujo  of  cards  which  does  not  balance.  For  similar  rea^onSy 
as  already  noted,  companies  which  have  a  nimaber  of  loose-leaf  ledgers 
keep  record  of  the  balance  of  each  ledger  separately.  This  may  be  done 
hy  rmining  in  the  general  ledger  a  separate  account  for  each  of  the  sav- 
ings ledgers.    A  better  plan,  however,  is  to  keep  a  daily  trial  balance  of 

0 


Pass 


NBW  .ORlBANa '^h-'^n^,    O 19  0_L 

Book   m  ,^     ?  ^  -S      : _is   hSt^neo  5   Days    for  the 


computation  of  interest. 

Please  present  this  ticket  for  the  return  of  same. 

Fig.  J50. — Receipt  ior   Savings   Book. 

AFFIDAVTr  TO  XX>SS  OF  PASS  BOOK. 

SItAtC  or   ®DtO,  (.,,,  Before  me  a  Notary  Public,  in  and  for  said  County,  personaUg 

CUVAHOOA  COUNTY.      )  ^ 

<9peared..^:pld^£i^-.^.0:y^r^r{^^ 

aho  heimg-first  duly  sworn  tays  that..hJU'^s  the  owner  of  a  certain  savings  account  with  Sbe  Cleveland 

Ztvat  Compant!,  of  Cleveland,  Ohio,  evidenced  by  PASS  BOOK  So.Sl2>.-^^ ,  issued  by  the  said 

company,  and  is  the  person  named  in  said  pass  book;  that  there  is  now  (iue..Z^avw;Lon  said  pass  book 

the  sum  ofj2o:^.jL.<^y)J^-iJ-A..SK.y>^^t^ 

that  the  said  pass  book  has  been  Ifst,  mislaid,  stolen  or  destroyed;  and  thtt  the  said  account  has  not 

been  sold,  assigned  or  pledged  to  any  person  whatsoever. 

SWORN  TO  before  me  and  in  my  presence  subscribed  <A*»......^^^^kv.<frri^C-...i:=:nn;:rrrr:^ day 


Jotary  PubUe. 


^.^^kL:.:....,.^ IPO.7-      .     ^     lOU^.^ 


RECEIVED  Of  (tbc'dcveUnb  tCnwt  (Eompan?^  this...Mdj£^y  ofJja:ysA.i:S^ /PO.^ 

(k^:L:-^y^.-^LL.c...ult^^xJ^  J 

Being  the  balance  due,  with  interest  in  full,  on  the  above  named  savings  account,  in  consideration  whereof 
J  hereby  agree  to  fully  indemnify  the  said  Trust  Company  against  any  loss  growing  out  of  or  in  any  way 
arising  from  the  payment  to  me  of  the  above  sum  without  presentation  of  the  pass  book  evidencing  said 
account  or  by  reason  of  any  transfer  or  assignment  of  the  said  account  or  any  interest  therein. 


Fig.  251. — Forji  Used  When  Pass  Book  is  Lost. 

the  savings  ledgers  in  some  such  form  as  that  shown  in  Figure  249.  Each 
day  the  total  debits  and  the  total  credits  for  each  ledger,  as  shown  by 
the  savings  journals,  are  entered  in  the  columns  shown,  and  the  balance 
for  each  ledger  is  extended.  The  total  of  the  balances  for  the  several 
ledgers  should  equal  the  total  savings  deposits,  as  shown  by  the  general 
ledger.  This  form  may  easily  be  arranged  on  the  plan  of  the  Boston 
ledger  if  desired. 


FORMS  FOR  SAVINGS  DFPARTMKNT.  355 

At  interest-paying  periods,  pass-books  are  brought  in  for  the  entry 
of  interest.  Occasionally  the  interest  is  enterrd  while  the  depositor  waits, 
but  it  is  more  connnon  to  retain  the  pass-book  for  five  or  ten  days,  giving 
the  owner  a  card  receipt,  such  as  is  shown  in  Figure  250. 

It  is  not  an  unusual  thing  for  a  depositor  to  lose  his  pass-book,  and 
demand  payment  of  the  account  without  presentation  of  the  pass-book. 
In  such  cases  it  is  wise  to  insist  upon  a  thorough  search  for  the  book,  as 
it  very  often  happens  that  it  has  simply  been  mislaid,  and  the  depositor 
finds  it  when  he  is  made  to  understand  the  importance  of  doing  so.  If 
the  book  cannot  be  found,  the  depositor  is  n  quired  to  sign  an  afti-^avit 
and  receipt,  such  as  that  shown  in  Figure  251,  and  the  account  is  closed. 


CHAPTER  XL 

FORMS  AND  RECORDS  FOR  THE  REAL  ESTATE  DEPART- 
MENT. 

THE  Real  Estate  Department  of  a  trust  company  undertakes  the 
care,  sale,  purchase  and  rental  of  real  estate.  Services  of  this 
character  are  often  included  in  the  administering  of  trusts  held  in 
the  estates  division  of  the  trust  department — or  the  individual  trast  de- 
partment, as  it  is  sometimes  called;  and  the  principal  forms  needed  for 
the  purpose  have  been  shown  under  the  heading  "Forms  and  Records  for 
the  Trust  Department." 

In  addition  to  this  real  estate  business  incidental  to  the  administra- 
tion of  their  trusts,  trust  companies  often  conduct  business  as  regular 
real  estate  agents.  If  the  amount  of  such  business  is  not  large,  it  is 
usually  carried  on  by  the  estates  division  of  the  trust  department.  In 
some  localities,  however — notably  in  St.  Louis — trust  companies  are 
numbered  among  the  leading  real  estate  dealers  and  agents,  and 
maintain  separate  and  well-equipped  departments  for  the  work.  Real 
estate  held  by  estates  in  the  trust  department  is  turned  over  to  this  de- 
partment for  management,  the  trust  department  becoming  a  customer  of 
the  real  estate  department  as  to  such  property.  In  such  case  the  fees 
of  this  department  are  a  charge  against  the  earnings  of  the  trust  de- 
partment, the  charge  against  the  trust  estate  being  the  same  as  if  one 
department  handled  all  the  business. 

The  relation  is  close  also  between  this  department  and  the  loan  de- 
partment so  far  as  concerns  real  estate  mortgage  loans,  and  some  com- 
panies handle  all  such  loans  through  this  department.  The  forms  needed 
for  this  purpose  have  been  given  in  Figures  177-193. 

In  the  present  chapter  will  be  considered  the  forms  needed  for  a  real 
estate  agency  business  as  distinguished  from  real  estate  business  con- 
nected with  the  administration  of  trusts. 


^n  Consteeratlon  of  the  Mississippi  Valley  Trust 
Company   listing  and    advertising  the   within  described  property,  I 

hereby  authorize  it  to  sell  said  property  for - 

ZX^aK^..^l!Kj:>r1^<..^-(^^  Dollars. 

a^4>agree  to  pay  said  Mississippi  Valley  Trust  Company  the  regular 
commission  established  by  the  St.  Louis  Real  Estate  Exchange,  2X^ 
on  City  property,  or  S^'  on  County  property,  upon  the  sale  of  said 
property  at  this  price,  or  any  other  price  which  I  may  accept. 

This  Contract    may    be    revoked    anytime    after 

._.M^<rciL..  /nS?...; 190  jf ,  by  my  giving  30  days'  notice  in 

writing  to  said  Mississippi  Valley  Trust  Company.-^ 


[li<MAM-.. 


Fig.  252.— Sale  Agency  Coxtract. 


FORMS  FOR   REAL  FSTATK   DEPARTMENT.  357 

The  department  is  of  course  equipped  with  maps  ami  cliarts  covering 
the  territory  in  which  it  operates,  files  containing  memoranda  rcgardinjj 
values  in  different  localities,  indexes  of  various  kinds  described  on  another 
page,  "For  Sale"  and  "For  Rent"  signs,  files  for  the  keeping  of  keys, 
and  other  necessaries  usually  included  in  the  equipment  of  a  real  estate 
office.  The  work  is  of  two  somewhat  different  kinds,  the  selling  and  the 
renting  of  real  estate;  and  the  department  is  sometimes  conducted  in  two 
divisions. 

Use  This  Blank  in  Listing  Property 
FOR    SALE. 

^  M.  Lou»»,  ino..!!>IO:fn'^^../^„,  |»o_7-.- 

Owner'.  N«me  _M-t;:>sA^(   %> .  0^.i^-rsSUr(!c>J^ 

Add,.«  __  J^U-A..  S^)S^    J^  , 


"   OESCRIPTION. 

Street  ..d  Number  ._Z^.>t  >f  _'^^'?^_^..- 

City  Block  No.  ±2^ IM  No._^.I7 

si«  of  Lot._tf  0 ....;«..  ...Z^C>._^. 

City  W»ter y<T. , , 


Electric  Light^jf^l 

Street  Grmded  _JK^ 

••      P.«d  with  .i3?>-Lc|^. 
Sideoilk ..  ..(2t.-wv«fcrCfcr. 
Alley 
Grmde 


:2^ 


BIdg.  ReilricHoot S^ifinvlLe<l?..3^ll^,_^^jaw_atA«i^___ 

.  -  IMPROVEMENTS. 

„ AutJJLt^^. 

B.ilt  ol  .  %\-C^V 

Roof  __  .'S^a.fel 

Number  Slorie.    _.2_._  fi;:A-_3]CtvC.. 

Occopied  a* 

Intrnor  Fioi»b. 


Batb> I 

RecepttoB  H>ll  _«<1 

Cemented  Cellar  ..  V^ 

How  Heeled      >^^*t    W-itnT. 
CoDdiUon  of  Bldg._^l»ryT^ 


DimentioDi  of  BIdg.    :i&'   X  ._i?  %» 

Dtte  Building  erected  _/.^.'?.<S 


L.WB.  Sb>de  Tree.  >nd  Shrubbery  .Wt^-/t<t'<«/*nv ^.  3^*:^<jU.'7«2i^ 
Do  You  WUh  SALE  BOARD  Pul  VftT.jDXiiA 


.1  RenUl.tTiC? ___J:!_^ 


ADDITIONAL  DLANKD  WILL  DC  rURNIDHKO  ON   APPUCATION. 

Fltl.    Jo.i. —  I)i;stHll'TION-    OK    PRorERTV    I.lSTtD    UtR    S.VI.E. 


358  TRUST   COMPANIES. 

When  property  is  listed  for  sale,  the  owner  signs  a  contract  appoint- 
ing the  company  as  his  agent  for  the  sale.  Figure  252  shows  a  form  of 
this  contract,  on  the  back  of  which,  shown  in  Figure  253,  is  given  the 
description  of  the  property. 

jrr^ — jj^ 

Ci.y  BlocX  NO.     -\ LoMJo,  l^t -^- 

Sii«  o<  Lot    ^.^  X    />Sj?gI ■ ■ — 

C.tyW«t«r      ^ 5?! "^ 


Electric  Light     ^ 


Paved  with    (Jh^cfC 


A:Vid*5^;fe- 


*jl«y     Oto 


Grtde P 


ift 


Building  Restrictions      Jirt-ix^^ytf;     3  0  )^.    ^■zVi .  -  CU^P^^t: — 

Mortgage.  S^g^X)*? Rate     L>      %      Uv>^<^^ ^^U^r^  I  >  J  ^p  e. 

Ta.e».  $^3  tl  


Price.  %^cyO-o'r  ''•'  ''°°'  ^^^' 


Ternns     \i^aj/^^mf>^^J^gt/.      3  i^. 


Address    qSOS    !^aXrV->^rwo^"i"    (3^^^. 


. -^       ooaro 

T  )      Receivad 


Fig.  i?j4. — Card  Index  of  Properties. 
UNIMPROVED    BUSINESS    PROPERTY 


iv;A.<iiv:/Kc7t^   -^"^' p'-r...Jo(K>d^ 


I L O Lot  No.  oS-: 


Fig.  255. — Card  Index  of  Properties. 


An  index  is  kept  of  all  properties  listed,  and  cards  are  found  most 
convenient  for  such  an  index.  The  size  of  the  cards  is  6  by  4  inches. 
They  are  filed  alphabetically  by  names  of  streets;  or  if  out  of  the  city, 
by  names  of  towns,  townships,  etc.     Each  card  contains  particulars  re- 


UNIVERSITY 

OF 


FORMS  FOR  REAL  ESTATE  DEPARTMENT. 


359 


garding  tlie  property  listed  on  it.,  so  that  it  is  not  necessary  to  look  up 
other  records  to  give  an  enquirer  such  information  as  he  may  wish  before 
viewing  the  property.  Figure  254  shows  a  card  used  for  this  index.  An- 
ollier  form  is  shown  in  Figure  255.  The  latter  is  one  of  a  set  of  several 
cards  differing  in  color,  the  idea  being  to  use  a  card  of  a  special  color  for 


.LEASet<7.      T^P^^ 


O^TE  <?r  L£ASL 


NAMF   OF   TFNAKI 


3^6    ^^^^    I     ^/ 


'fx 


><r' 


a^ 


c^.S. 


business   addrc 


cp-L^Ui^ 


r^3- 


3^1 4-    UJv^  vS--^ 


Premises 


&K^ 


A.r^liL 


m 


IM. 


•^tT'-tr-. 


^f. 


/•C    i9oC  s2^^/~  0^icn\JyK\         ^>N-    a^(/au^Ts-Cje^ 


COMMONWEALTH 
REAL   ESTATE  DEPT 


TRUST   COMPANY 
ST.    LOUIS.    MO.  I 


Fig.  25G. — Ixdkx  of  Tf.nants. 


\^\UU^  ■  :;JV  ■  ^  ^^^^.v^jlA^W/ 


m 


Otxr^Urvyy 


'^<^(^. 


TENANTS 


OWNE<)'SN*UE. 


PH0.C^^7^^ 


Location  of  Property 


JAX 


W»TER  Rest  paiO  SY 


|NSUH*NCE  PLACED   BY. 


L±L 


i2u 


Fig.  257. — Ixdex  of  Tex.\xt8. 


each  kind  of  property  listed.  The  card  shown  is  for  "unimproved  businea* 
property:"  others  are  for  "improved  business  property."  "dwellings." 
"fiats  and  apartments,"  "suburban  and  acreage."  Cards  may  also  be  dis- 
tinguished from  each  other  conveniently  by  having  tabs  at  the  tops,  a 
certain  tab  being  left  on  all  cards  used  for  listing  a  given  kind  of 
property. 


360 


TRUST  COMPANIES. 

OWNER'S  INDEX  CARD. 


Address 

/:i'Af:^O'0Arj^^^  Om\^ 

NUMBER 

STREET 

KINO 

PRICE 

/^ni 

\  \  iCi  ,-fl-rv-I^T^  ,'-r  /Ly>\\  , 

/^\.rJ^y^ry 

■^3o^. 

^ki 

i^-tA      C 

^.A-^Uti£r.J: 

I'S'O-o-O. 

11&M-3 

(Jh-Yxr\^./:L^^  J 

^^rWL^a^ 

^OtX), 

Si^cvO 

OV^.     dcA.. 

A.  d 

J^oo. 

Fig.  i?58. — Index  of  Owners. 


Name ^tO  f^:Y\ 


1^ 


/311 


Source  oflnquiry — '^m.""'^-V^. 


U\_<\A.*„^_^     OJK^ 


.^ 


jTinc' 


g4.i«reoffnQM'iy   Ia:^3^^   ^  AjUir^^ih^^ ^    <^>^nL  ^J-JLle^JJ^f^  f~^ho-d  ^  cCt  aS=nJr  gc>--', 

1 

DAT-C 

J_5e  '/            1 

MEMORAMOOM 

1 

t.,. 

Tfi 

^o-Osuf.    cdt  *7^/^  ^i^tc^  (2^.   c^-^t^  ^.xx  -f<^.  ^^  a^.^  . 

8  < 

i 

II 

i' 

ji 

ii 

i^ 

1)                                                                                                          _ 

i 

t 

1 

'' 

|i 

[1 

1 

Fig.  ;2j9. — Index  of  Inquirers 


FORMS  lOK   HEAL  ESTATE  DEPARTMENT.  36l 

Figures  256  and  257  show  two  different  forms  of  cards  used  for  an 
index  of  tenants.  The  sizes  of  the  cards  are  3  by  5  and  4  by  6  inches, 
respectivtly.     They  arc  Hlid  alphalu  tically. 

Office  Of 

MISSISSIPPI    VALLEY    TRUST    COMPANY. 

REAL    tSTATE    DEPARTMENT. 

St.  Louis.  I(io.,---^y<:j^^:^^:::*^-^Jb^. 190^-- 

Received  of  .._.ya£^u;^.!^L.>^aX<?^v/ 


tbc  •umof  ..V  W^-.M^ .  ■'r-..-  r--V.r. -■  -^=r">^rr=rr:::?»-,r-rr::rrT-rr-r--rr^^  ■.-.^ ■„. D01.UK8. 

•t  earnest  money  oa  piu«ti>ie  of  a  certain  parcel  o( improTcd  property  lying  in  Ciij  Block  No V of  the 

City  of  St.  Louis,  having  a  front  of .JhQ. feet  on  the. — '^^TiAifefV  aidaof 

Q JS^::y\SX^'y\/ Street,  and  a  depth-^TAi^wardly  of- J.4^^- feet. 


The  above  described  property  ia  this  day  sold  by  the  onderaigned  agent,  bnt  snbiec:  to  the  approral  of  the  ovncr  thereof,  to  said 

Ljai/<:MX_f2M  ...sM.a:a?«Atfr^ rrrrtrrr^rrrir-rr^r-r-^rrr::^^  the  total  «>n>  oi 

J*Ai/^•.■..  A^^>:<:y<^^0<irv:^...-..  r  —  -- j:z.-r::rrrs^:rr:trr-:r-:— rrrr-'" ~ -T-T — r^..  .OoUars.  payable 

^''''V^-tJU^...,^^^^  Dollar, 

in^  cash,    of    *hich     Ibe     above     mentioned     earnest     money    ahall^  be     taken     aa     •     pan,    and    the    rcmunder    of 

»^<^'T?_..  7rsJ;t:%^.Sr<i^■nc•7!d>^.•rr~-r■■^^~^^  :-=»— r-^  -OoUara.  payable 

OD  or  Iwfore  ^Q^\'-: /.V   ^13S>  ^ ........     :     Tr — T-r — TTT  ._  .with  intemt  at  S^P^  ..  per  cent  per  ^num 

Irom  .   C^^-At^^ '*""*      ■^rr'T'^rC  .'.  T^*^    TTHT.        ...  _    ...payable  semi-aonaaJly,  said  deferred  payments  to  be 

secured  by  ir»i  parrbase  money  Deed  of  Trust  on  the  above  menuoned  property. 

S«id  property  w:ll  be  conreyed  by  CtoenO  Warranty  Deed  Iree  from  hens  and  incombrancet,  except  ss  to  general  and 

Kpnnkling  taxes  for  the  year  -.  1  .j  0  VC  .   ^"       7.'  ~Z^Z~'^  ..~~~^    ~^^~~T~^-. .  ..and  snbtequent  years  and  all  special 

taxes  levied  or  assessed  daring  the  yfx  -I  if.Ci4   ' — r.— rr — -,  which  the  purchaaer  aiaames  and  agreo  to  pay;  sob|cct  also  to 


listing  leases  now  uo  Saul  property,  expiring 


f,jSLQj6 


ubicb  Ibe  purchaser  accepts,  sabjul  alaa  la   Psi*         »f  TwH  I 


•  bleb  the  purchaser  aaauivcs  aoJ  «grrva  to  pay.  sul^ect  alsu  to  icstrictious  now  oa  saiJ  |>topcny,  or  such  i 
ihcreoo  by  tbc  grantor  _*— --  - 

The  s«i<l  purihaser  is  .iccordrd      A^''^^-'     . ..      da%-s'  time  from  this  dale  lo  «bicb  to  have  the  utic 
cloac  Ibc  s.>lc  at  tbr  olfiic  ol  the  MhstaalppI  valley  rnul  Conpaay. 

II.  upou  cxsmioaiion,  ibr  title  piotes  to  be  dvfective.  and  cannot  be  made  good  within^  reaaunable  time  ih«  sale  shall  i 
olf  sO'l  the  curnot  money  returned,  il  the  purchaser  so  riecu,  but  otherwise  the  sale  shall  suad  good  and  be  blading  apva  pv 
chA>cr  ^ud  owner:  should  title  prove  to  be  defective  and  cannot  be  made  good,  as  aforesaid,  the  cust  at  ccrtiScate  of  utJc  bu< 

l] 
exceed     •v.it.^^'S  ~—    ■ ^ — " —     ^ — ^r:-: ' ..  Dollars,  will  be  refunded  lo  said  porchaaer 

fteiiTs.  lusurance.  Ininesi  ou  lice^l  of  Trust  sod  Tales  on  said  {.ropeny  to  )•«  prorated  to  dale  \ft  (.ioatog  this  aaie  I'pi 
the  completiou  ol  this  sale  a  •.omu.issioo  ol  1>,«  is  to  be  paid  to  tbe  Mlaabatppi  Valley  TrwM  Coapaay  by  the  vendor 

rime  u  declared  to  br  Ibe  essence  n(  ibis  t.oalra*-t,  aud  if  sale  is  not  clt,«ed  prvmpt,>  as  alwe  provided,  then  witbou  a] 
notice  whalerer,  at  i,ptioii  ol  owner  ol  vid  pro|iertv.  said  earuesl  Oionev  hereby  receipted  for  shall  tie  (orleitcd  lo  said  owner 
liquidated  danisges.  aud  Said  purchaser  ahall  W  taken  to  have  wai«Td  slj  ri^bt.  iBleresf  oc  e^fuity  under  thu  coatract  and  in  sa 
peopcrty.  aa  though  Ibis  couUact  bad  out  been  made 

SKINEO  IN  DUPLICATE.  _.     __ 

Accepted  under  above  term,  and  cnditKin.  WJSlSSIfM  WUH  IMST  tOtHMt,  1^0. 


.  ..(vUcUc^/'U.V^ 


Fig.  -'«)().— Memohandcm  of  Sale. 


362  TRUST  COMPANIES. 

Figure  258  represents  a  card  4  by  6  inches  in  size  used  for  an  index 
o[  owners  of  jDroperty. 

A  loose-leaf  form  for  a  list  of  inquirers  after  property  is  given  in 
Figure  259. 

Many  companies  issue  booklets  giving  a  list  of  the  properties  which 
they  offer  for  sale,  describing  each  ])roperty  briefly  and  stating  the 
price  asked. 

...SALE... 


Purchaser 
Owner. 


.21^ 


U■-.,^.^^l      -'?'/,C/lX>V.<1y 


Sold  for  S^^i^CL2 


.,vo 


.  sjo^y^ 


Earnest   Money  Paid, 

Balance  cash  Payment,  S^^'  -' « 


Deed  of  Trust.                      tS  /  '^^T'V' 
Date  of  Sale  _'J:iA-liii-_?£^_Z_i2^ 
Date  of  Closing      Ma-TC^  II  ,    !']0"[ 
Taxes  190  6_  Paid  by      C^'.^l >-£-.- 


Deed  to  "  i'<^Vo  ^Al  .  ^^..^Ul^AjIj 


a  me  of 


Salesman     0\  .    ^  -   '^Cv 


Conveyance  Clerk  «lll  x'erlfy  and  "OK"  immediately 
upon  closintr  salt  and  hand  to  Chief  Clerk  who  will  settle 
with  the  Assisting  f^gent  and  giveSalesman  proper  credit. 

Fig.   361.— Report  of  Sale. 

When  a  customer  decides  upon  the  purchase  of  a  property,  he  pays 
down  a  small  amount  as  "earnest  money,"  and  is  given  a  receipt  or 
memorandum  of  sale  in  such  a  form  as  that  shown  in  Figure  260.  This 
is  written  and  signed  in  duplicate,  the  company  retaining  a  copy.  Upon 
i'ompletion  of  the  sale,  if  by  payment  in  full,  the  company  delivers  to 
the  purchaser  the  former  owner's  warranty  deed;  if  by  partial  payment, 
the  purchaser  delivers  his  note  or  notes  for  the  balance  of  the  purchase 
price,  together  with  a  mortgage  securing  same,  and  receives  the  warranty 
deed.  In  either  case  an  abstract,  certificate  of  title  or  policy  of  title 
insurance  is  also  furnished.     Sales  are  also  made  under  land  contract. 


rORMS  rOR  REAL  ESTATE  DEPARTMENT.  36.) 

The  employee  makinp-  a  sale  fills  out  and  hands  to  the  real  estate 
officer,  topjether  with  the  cash  received,  a  report  of  such  sale  on  a  form 
like  that  shown  in  Figure  26 1. 

St.   Louis yjayyy^,J_^_t904- 


VJ^ULA^ 


ict 


Kindly  alloiv  bearer  to  inspect  premises  occupied  by  you.   and 
by  so  doing  oblige.  Very  truly  yours, 

MISSISSIPPI  VALLEY  TRUST  CO., 


By. 


(R.  6.  0, 


Fio.  OCiJ. — Pkrmissiok  to  Insitct   rKOpniTV. 

When  the  company's  agent  does  not  accompany  the  inquirer  to  the 
property  which  he  wishes  to  inspect,  it  is  convenient  to  use  a  card  like 
that  represented  in  Figure  262,  addressed  to  the  occupant  of  the  prop- 
erty, or  to  the  party  who  is  locally  in  charge. 


^  ^  U^w  Tenant.       —    ya/v..  /-S" i9o7_ 

Name       WL^v^^^jyOj  J-  O  i^.^^XfJ CJ_ 

Prope^ented _    ^.J^lH-f     U^O-r^jU-n  ^-^ , 

Owner  of  Pmporty   '  ilCu .  'l/lLa^-^^yty^j^^  ^L/ (  Lease 

Former  Location ""^-^   . |  From   'll^ld     to  'Il^jo.^.— 

Business  A<lflrp<^    •3^>f-   ^^rti.  -Sf-. 

Collect  Rent  at ^<>  • 


Rent.  g3>Sl- per  Month , 

Rem  Begins '//^hl Paid  |3«S7- 

Fig.    263. — Memorakdi-m    of    N'rw    Tkvant. 

REMOVAL.  ^iO.^ — ^~ 190.' 

N3me_y0ii!ia-tiL_^ijLk.>vt: U. 

Property  ^H- ^ '^-^'sx^^,^r^    •^'^- 

Owner    05<.va'^   <^  i.^tP^V^.- 


to    gc<T^\.,S^ 


Rent  per  Mcnth_<2»^ 


Amount  delinquent.  $.Q^Lz 


Fio.  -364. — RtMcn-Ai.  Memohavdum. 


364' 


TRUST   COMPANIES. 


Property  may  be  rented  from  month  to  month  without  a  formal  writ- 
ten agreement,  or  for  a  specified  term  under  a  written  lease.  Forms  of 
leases  vary  according  to  the  conditions. 

The  employee  who  rents  a  property  hands  in  for  the  use  of  the  book- 
keeper a  memorandum  like  that  in  Figure  263.  In  case  of  a  removal,  he 
uses  the  form  shown  in  Figure  264. 

Ordinary  blank  forms  answer  the  purpose  for  receipts  for  rent,  but 
it  is  more  convenient  to  have    a  special  form    such  as    that    shown    with 


r,  ...  _^3/ 

}- 

tZO'r. cw. 

ar 

•  S'JiS" 

3c 


Rent  of  >^? 


; — ^^— ^^^^-^--^ -^=^^ — ■ — -^ — — ""^Doll 


C.  ^__..-5r__-.  ,1906 


rrrrr:  Dollars.    tSJl^ 

No.  3J_;^_.<^-T-A^  ^:t __._ 


fot..J^2>fy _,Month    .    Ending    O^^-^L^'y^  -^  L.-r^  .1906 


Mississippi  Valley  Trust  Cowpany. 


.  't^-srsiH- .' 


RcoucsTS  roe 


Fig.  J65. — Receipt  for  Rext. 


The  law  requires  monthly 


!  In  writing  before  rtni  <!«>  on  vacating  premises. 


...^, -J.    3'l^v^\..«i^;^)^- _... 

<y       rlf^cnt  cf  the.  Pronhci  .  S.l.^.J. C'^^k::rsJk^-^....Si:.^ 

forjhe  nm1hcrJmg.':J}:L2>.^^^.3l.,J'^.0L _.._ 

'Sill  be  due..'...  '.''^U^rC^/\^ /., I.2Q...L. .„ 

REAL     ESTATE     DEPARTMENT 

Mississippi   Valley  Trust  Company 

N.     W.     Con.     4TH     AND     PiNt     STRCETS.  ST.      LOUIS, 


Plea^i-  remit  the  amount.   $ 


201- 


promptly  on  tltat  diite 


litgUESTS  FOR  KEPAIRS.SMOULD  BE  MADE  IN  WRITINa. 

Fig.  2(iG. — Rext  Notice. 


stub  in  Figure  265.  Whenever  possible,  it  is  well  to  get  the  tenant  into 
the  habit  of  calling  at  the  company's  office  to  pay  his  rent.  Many  ten- 
ants are  willing  to  do  this  regularly ;  thus  saving  the  company  the  trouble 
and  expense  of  a  special  trip  for  collection,  besides  bringing  them  in 
closer  touch  with  the  company,  so  that  they  are  apt  to  become  customers 
of  the  other  departments.  If  it  is  necessary  to  send  notices  of  rent  due. 
a  form  like  that  shown  in  Figure  266  is  mailed  several  days  before  the 
rent  is  due.  When  the  rent  is  delinquent,  a  notice  like  that  in  Figure 
267  will  often  obviate  the  necessity  of  legal  action. 


FORMS  FOR   REAL  ESTATE   DEPARTMENT.  365 


The  Guardian   Savings   Sl  Trust  Co 
real  estate  department. 


CLEVELAND,  o.. rlLxyr<^r   1^     ,  ^^Q!\- 


PLEASE    TAKE    NOTICE    THAT^JXJ    MUST    PAY    YOJ^R    DELINQUENT    RENT    AT    THIS    OFriCE    OH 


SURRENDER    POSSESSION    Or    PREMISES    A1 


10  g 


^ 


IMMEDIATELY. 


VOUR    NON-COMPLIANCE    HEREWITH    WILL    NECESSITATE    OUR    BRINGING    ACTION  TO    SECURE 

possession. 

The   guardian    savings    S   trust    Co. 

I  inm   '^jn!  ^* ^^-. 


"■d- 


Fig.   -^67.— Notice  of  DEi.ixutKST   Hi:nt. 


THM    KDOCraiTION    MCVr    BE   ATTACnEa>   TO   aiu. 

I»t  «    ■ — »  t^  - 

St 


No. 902_ 

MISSISSIPPI    VALLEY    TRUST(^0 

REAL    ESTATE    DEI'ARTMEMT. 

TO    ^.rw^.  '^-^  <0.. 


TO  aux. 

Louis,  Ma     ^-TL.  ,''^L-190.2 


Please  ^Hv>>    /vT -^    C'^t^^tut-.Vt^t^  /-c^^^^^Cfc^D.  A^  g^  oX" 


loiio  <::^Ltv^  4/-. 


APPROVEDi 


-and  charge  t(f  account  ol 


I  VALLEY  trust 


Ral  Eilatc  Dtvucowrt. 

Fig.   i?()S. — Hr.QfisiTiON    ton   Sri-i'i.iF.s  on    Hr.i'Ains. 


co^i 


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^\ 



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45 

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Fig.  270.— Uest-Roii.  Book. 


3(^6 


TRUST   COMPANIES. 


Repairs  or  supplies  for  buildings  in  charge  of  the  department  are  or- 
dered upon  written  requisitions  like  that  shown  in  Figure  268,  of  which 
carbon  copies  are  retained  by  the  company. 

Figure  269  shows  a  loose-leaf  form  used  to  list  properties  in  charge 
of  the  department. 

The  left-hand  page  of  a  "Rent  roll  book,"  permanently  bound,  is 
shown  in  T'igure  270.  The  width  of  the  page  is  18  inches.  The  record 
is  contijiued  on  the  right-hand  page  of  the  book,  the  columns  of  whihc 
are  headed  with  the  names  of  the  months  from  March  to  December, 
inclusive.  This  answers  the  double  purpose  of  a  rent  book  and  a  list 
of  properties  handled  for  each  landlord. 

Forms  for  the  record  of  insurance  and  taxes  on  real  estate  held  in 
the  trust  department  have  been  sliown  in  Figures  71,  75,  76,  77  and  78. 
Other  forms  for  such  records  are  shown  in  Figures  271  and  272. 

Figure  273  shows  a  statement  of  rents  collected.  The  sheets  are 
arranged  in  a  loose-leaf  binder  with  a  duplicate  form  underneath,  so 
that  when  the  sheet  is  torn  out  to  send  to  the  customer,  a  copy  of  the 
statement  in  permanent  form  is  retained. 


UU^DLORDS-   INSURANCE 

NAMF  OF  JS 

Sii 

RECO 

f 

^ 

D. 

.as. 

^„^ 

,.«,» 

„-..,. 

^^ 

-«,.. 

Fl 

P 

s 

j^ 

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rn 

.....™„ 

Okt^P  ^-711-^. 

14A  lid-  I/la/k^  Sd-. 

, 

'V 

oi 

■i...^^, 

- 

Fig.  271. — Ixsuraxce  Record. 


The  Tickler  or  Maturity  Index  of  this  department  does  not  differ  in 
principle  from  those  of  other  departments  already  described.  Either 
cards  or  bound  books  are  used,  according  to  preference. 

The  methods  of  accounting  for  this  department  vary  according  to  the 
extent  of  the  business,  and  the  tastes  of  the  officers.  The  general  methods 
already  described  for  the  estates  division  of  the  trust  department  are  for 
the  most  part  adapted  to  the  use  of  this  department.  Original  entries 
may  be  made  upon  debit  and  credit  tickets,  such  as  have  been  shown  in 
Figures  158  and  159,  and  from  them  be  entered  in  the  journal,  or  may 
be  entered  at  once  in  an  ordinary  cash-book.  For  a  journal,  the  form 
shown  in  Figure  274  is  convenient.  The  names  of  the  accounts  are  en- 
tered in  the  middle  column,  descriptions  of  items  at  the  sides.  The  ledger 
forms  shown  in  Figures  l6  and  17  are  convenient  for  accounts  in  this, 
department.     Ordinary  ledger  forms  are  also  used. 

Forms  of  rent  books  have  been  shown  in  Figures  70,  71,  72,  and 
in  Figure  270.  Another  form  is  shown  in  Figure  275.  The  top  of  the 
page  being  blank,  such  memoranda  may  be  entered  as  the  bookkeeper  or 
officer  in  charge  prefers. 


FORMS  FOR  REAL  ESTATK  DKPARTMENT 


361 


1 

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TRUST   COMPANIES. 


RENT  COLLECTIONS  POP 
COMMON'WEALTM    TRUST 


<- 

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1     ,^6            ST    LOU,S. 

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Fig.  273. — Statejif.xt  of  Rents  Coltecteo. 


403 


fournal.                               ./to-,< 

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Fig.   274. — Jourxal. 


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^ 

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Fig.  275. — Rext  Book. 


CIIArTl'R  XII. 
THE  TITLE  INSURANCE  DEPARTMENT. 

L\WS  have  been  enacted  in  many  of  the  states  throughout  the  coun- 
'  try  during  the  past  twenty-five  years  providing  that  companies 
may  be  incorporated  for  the  purpose  of  guaranteeing  or  insuring 
the  title  to  real  property  and  to  conduct  a  mortgage  loan  and  trust  com- 
pany business:  the  latter,  however,  being  consistent  with  the  powers 
granted  them  as  such  title  guarantee  or  insurance  companies.  Among 
the  powers  of  such  a  company  is  the  right  and  authority  to  prepare  and 
furnish  bonds,  mortgages  and  other  securities  and  to  guarantee  the  valid- 
ity and  due  execution  of  the  same  as  well  as  the  performance  of  contracts 
incident  thereto;  to  make  loans  for  itself  or  as  agent  or  trustee  for  others 
and  to  guarantee  the  collection  of  interest  and  principal  of  such  loans; 
to  take  charge  of,  sell,  mortgage,  rent  or  otherwise  dispose  of  real  estate 
for  others,  and  to  perform  all  the  duties  of  an  agent,  or  trustee,  relative 
to  property  conveyed  or  otlierwise  entrusted  to  it.  Such  title  guarantee 
and  trust  companies  have  been  organized  and  are  doing  business  in  most 
of  our  large  cities.  These  companies  preliminary  to  commencing  work 
usually  acquire  tlie  books  or  records  of  local  abstract  firms,  or  corpora- 
tions, as  a  basis  for  their  future  guarantee  plants.  During  the  past  dec- 
ade the  growth  of  these  companies  has  been  very  rapid  by  reason  of  their 
extensive  operations  resulting  from  their  combined  powers.  Experience 
has  proven  that  in  the  consolidation  of  the  guarantee  and  trust  features 
better  results  have  been  obtained  for  each;  this  is  very  well  illustrated 
in  the  case  of  a  mortgage  loan  made  by  the  company;  after  the  loan  has 
been  approved  and  accepted  the  title  to  the  property  to  he  secured  by 
the  mortgage  is  guaranteed  by  the  company;  after  wliich.  if  desired,  the 
mortgage  can  be  placed  upon  the  market  and  be  handled  to  better  ad- 
vantage than  one  not  so  guaranteed. 

In  order  to  fully  understand  how  such  companies  transact  their  busi- 
ness in  the  exercise  of  their  powers  enabling  them  to  issue  their  different 
forms  of  policies  of  title  insurance  it  is  necessajy  to  go  into  det.-:il  and 
explain  their  procedure. 

To  begin  with  the  title  insurance  company  owns  its  abstract  plant, 
built  on  the  most  modern  and  approved  plan,  consisting  of  a  complete 
history  of  the  title  to  all  of  the  real  estate  in  the  territory  where  it  does 
business,  including  not  only  a  transcript  of  the  deed,  mortgage,  probate 
and  tax  records,  but  of  all  other  matters  of  record  which  may  affect  the 
title,  such  as  judgments,  decrees,  executions,  levies  and  pending  suits  in 
any  court  of  record,  whether  federal,  state,  county  or  municipal,  includ- 
ing also  plats  and  maps  showing  partitions,  subdivisions,  street  and  alley 
openings  and  vacations,  etc.  The  necessity  for  this  is  obvious,  for  in 
guaranteeing  titles  the  company  must  be  absolutely  certain   that  the  ab- 

24 


370 


TRUST  COMPANIES. 


stract  work  is  accurate  and  beyond  question,  and  this  can  only  be  accom- 
plished by  using  a  plant  over  which  it  has  full  and  complete  control  and 
supervision. 

In  applying  for  title  insurance  it  is  not  only  customary  but  the  rule 
to  require  applicants  to  fill  out  printed  applications  for  the  same,  wherein 


Pom  IP.  J4M6. 


^>j..^d. 190;^ 

le^the  title  to  premises 


J.JO ._ Cleveland,  O 

The  undersigned  hereby  employs  Thb  Guarantee  Title  and  Trust  Comp. 
hereinafter   described,  and   if  ityipprovcs  of  the  same^o   isjjie   a    Policy  in  its   usual  form  against  liens  or  defects 
the  sum  6f  ....^fc^^oM 
For  a  preraijjia  of. ^Jo^'JJy.. 


% ^..a.n... 


Brief  description  of  premise^ ..... 

Hous^eNo..^077.  . 

.1mA'..../3Z.!^... St 

Premises  now  owned  by. 
Estate  or  interest  to  be  insured.. 

P»rty  to  be  insured 

By  what  means  and  at  what  time  was 
title  vested  or  to  be  vested  in  party 
to  be  insured. 

Estimate  of  sa.\ae,%./0-0.0Ot... 


(t?o 


dJ-Xc^'^-3^ 


.<yn 


4^^ 


Realty,  $  J.O.Q.O.!. Improvements,  %  ../.(J.Q.^ 

t 


/SO  00,  ^  ;^^/a^J^ 


Encumbrances  and  adverse  interests, 
known  or  rumored,  and  by  whom 
held  or  claimed 


a/a^^cub^  -J^ 


/^o  (0 


if,  before  the  delivery  of  the  Policy,  he 
ns  or  incumbrances  affecting  the  title 


■  his  agent,  should  have  any  notice  or 
be  insured,  he  will  at  once  fully  make 


It  is  agreed  that  the  foregoing  statements  are  true  to  thelKst  oi.yT^}!^- knowledge  and  belief,  and  are 

representations  on  the  faith  of  which  said  Policy  is  to  be  issued.  -^ 

The  applicant  hereby  agrees 
information  as  to  defects,  objectio 
known  the  same  to  the  Company. 

The  applicant  understands  that  under  the  Policy  to  be  issued,  the  Company  will  not  insure  against  special  assess- 
ments or  liquor  taxes,  nor  the  rights  and  claims  of  parties  in  possession  not  shown  of  record,  nor  conveyances,  agreements 
or  mechanics'  liens  not  filed    or  of  record  at  date  of  issuance  of  Policy. 

The  applicant  hereby  agrees  that  whenever  the  Company  notifies  him  that  it  will  issue  a  Policy,  he  will  accept  the 
same  and  pay  the  premium  therefor. 

If  the  Company,  after  examination  declines  to  issue  the  Policy 
to  pay  the  necessary  expenses  incurred  by  the  Company  ' 


of  defects  in  the  title,  the  applicant  agrees 


pplicant, 


Fig.  xJ76.— Applicatiok  for  Guarantee  of  Title. 


are  to  be  found  a  number  of  questions  relative  to  the  proposed  insurance 
and  which  are  agreed  upon  to  be  a  warranty  of  the  facts  therein  con- 
tained.    Figure  '276  shows  a  form  of  such  application. 

It  will  be  observed  that  the  application  sho-\vn  as   Figure  276  is  in- 
tended for  an  owner's  policy ;  the  form  for  an  application  for  a  mortgage, 


THK  TlTl.i:  INSIHANCK  DEl'AHT.M  KNT.  37 1 

leasehold  or  any  sjHcial  policy  is  the  same,  but  the  answers  to  all  of  the 
questions  relating  thereto  must  be  consistent  with  the  estate  or  interest 
to  be  insured. 

After  tlie  ajjplication  has  been  received  and  accepted  by  tlie  company 
an  abstract  of  the  title  to  the  property  sought  to  be  guaranteed  is  pre 
pared  and  submitted  to  the  title  officer  of  the  company.     If.  in  his  opin- 

THE 

Guarantee  Title  and  Trust  Company, 

CLUVHLAND.  OHIO 


Policy  of  Title  Insurance. 


THE  GUARANTEE  TITLE  AND  TRUST  CO.MPANY,  by  this  policy  of  icsuranct,  in 
consideration  of  the  sum  of One  Hundred  oo/lco  Eollara    (tlCO.OO)  


to  it   paid,  insures John  Benaon  Thorpe,  his 


executors,  administrators,' heirs  and  devisees,  and  all  other  persons  to  whom  this  Policy  may  be 
transferred  with  the  assent  of  this  Company,  testified  by  the  signature  of  its  proper  ofiBcer  endorsed 

on  this  policy,  against  all  loss  or  damage  not  exceeding— Ten  Thousand  ooAoo  Dollars   

(Jl  0000.  00) ■ 

if-"—  which  tlie  insured  shall  sustain  by  reason  of  defects,  or  unmarketability  of  the  title  of  the 
insured  to  the  estate,  mortgage,' or  interest  described  in  Schedule  A,  hereto  annexed,  or  because  of 
liens  or  incumbrances  charging  the  same  at  the  dale  hereof,  excepting  only  such  liens,  incumbrances 
and  other  matters  as  are  set  forth  in  Schedule  B,  or  excepted  by  the  condition*  of  this  policy  hereJo 
annexed,  and  hereby  incorporated  into  this  contract,  the  loss  and  the  amount  to  be  ascertained  in  the 
manner  provided  in  said  conditions,  and  to  be  payable  upon  compliance  by  the  insured  with  the 
stipulations  of  said  conditions  and  not  otherwise. 

This  Policy  is  issued  upon  application  by  or  on  behalf  of  the  insured,  numbered  19651  , 
and  agreed  by  all  parties  claiming  hereunder  to  be  a  warranty  of  the  facts  therein  stated. 

In  Witness  Whereof,  The  Giarantee  Title  and  Trust  CoMrASv  hath  caused  its  cor- 
porate seal  to  be  hereto  affixed  and  these  presents  to  be  signed  by  its  President  and  attested  by  it» 

Secrctarj-,  this-  Blchth day  of  Januarj-  ^^^ in  the  year  of  our   Lord  one  thousand 

nine  hundred     and  seven,   at   3:40  P.    '2.     ^^» —^- 


?7  7.-  'liTii:    Insih.vmk    roiuv    (lir>t   l>ii>:»'). 

ion,  the  title  is  insurable,  he  directs  the  issuance  of  the  policy  in  accord- 
ance with  the  forms  shown  as  Figures  277,  278,  279  and  280.  If  the 
owner  of  the  estate  to  be  guaranteed  is  a  corporation,  co-partnership  or 
association,  the  policy  would  run  to  it,  its  successors  and  assigns,  instead 
of  to  a  person,  his  or  her  executors,  administrators,  heirs  and  devisees, 
as  shown  in  Figure  277. 


372 


TKUST  COMPANIES. 


Figure  278  shows  an  absolute  or  fee  simple  estate  guaranteed.  This 
form  is  commonly  known  as  an  owner's  policy  and  is  used  as  such,  and 
the  company's  liability  thereunder  is  forever,  or  until  the  policy  is  sur- 
rendered ?nd  cancelled,  in  accordance  with  its  conditions. 


P0UC7N0.    19551. 


Schedule  A. 


1.    The  estate  or  interest  of  the  insured  in  the  premises  described  below,  covered  hy  this  policy 

Fee  Simple.  


I  by  which  the  estate  or  iaterest  covered  by  this  policy  is  vested 


An  undivided  one-half  Interest   in  prerolsea  described  below  by 
Descent   through  the  Estate  of  S.   P.  Burke,   deceased.   Estate  admin" 
istered  upon   in  Cuyahoga  County  Probate  Court  , Docket  101 , No  .16378. 
An  undivided  one -half   interest   in  premises  described  below  by 
Warranty  Deed  fron  A.  D.   Fraser  and  V^ry  A.   Fraser,  his   wife  ,  to 
John  Benson  Thomas,   dated  January   8,  1907,   filed  for  record 
January  8,  1907,  at  3:40  P.   II.,  and  being  File  No.   550,731.—— 


8.    The  premises  in  which  the  insured  has  the  estate  or  interest  covered  by  this  polit 


Situated  in  the  City   of  Cleveland,  County   of   Cir^'ahoga  and  State 
of  Ohio,  and  knovm  as  being  SubLot  No.   3'0   in  V.    C.  Leslie's  Sub- 
division of  part   of  original  One  Hundred  Acre  Lot  No.   491  ,  as 
shown  by  the  recorded  plat   in  Volume  60  of  Haps,  Page   3  of 
Cuyahoga  County  Records,   ana  being  40  feet  front   on  the  Easterly 
Bide  of  K.  132nd  Street  ana  extending  back  of  equal   width  120 
feet  deep,  as  appears  by   said  plat.    ^— — — ^— — .^_— ^^«^__ 


Fig.  278.— Title  Insurance  Policy  (Continued). 

In  other  forms  of  Schedule  "A"  (Figure  278)  where  the  estate  or 
interest  insured  is  for  life,  term  of  years  or  mortgage,  Item  1  of  the 
schedule  would  show  the  nature  of  the  estate  insured  and  Item  2  would 
disclose  the  source  by  which  that  estate  was  vested  in  the  insured. 


THE  TITLE  INSURANCE  DFl'AK  TMENT.  373 

The  company's  liability  uiuh  r  these  latttr  forms  of  i)olicies  ccase« 
upon  the  death  of  the  life  tenant,  termination  of  the  leasehold  or  dis- 
charge of  the  mortgage,  respectively. 

Other  interests  or  estates,  such  as  rights  of  way,  party  walls,  re- 
strictions and  the  like  are  insurable  and  the  form  shown  as  Figure  278 
can  be  used  and  fitted  to  meet  these  special  requirements. 

Schedule  B. 

Tbii  policy  don  not  iuort  •c«iMt  took  «<U1m.  ioUrccla,  defects,  obj««(i&be  to  liilr,  litM,  chitgtt,  InJ  Isf  dJUbrkocM  iffKiln^  mli 


Mortcace  fro."  A.   D.  Frusar  ano  llary  A.   Franer,  hl»  wife,  and  John 
Benson  Thoiiaa  ,  slr.rle,  to  Charles   '^.  Laughlin,  for  Jt-OOO.OO,  oated 
yovo.'anar  6,  1906,  filed   for  racora   l.'ovaiabar  9,   1906,   at  10:?S   A.  H. 
and  recorded  lo  Vol  xne  2060,  Pasr.o   31    of  Cuyahoea   County  Records. 


2:        The  Taxes   of  1906:  The  Tr-auurer'a  CJeneral    Tax  TiUj-llcAte  ehov/a  ♦84.34 
due. 
S;eclr\l   Taxes  and  AsBesaient s   rf  any  kind.    If  an;-. 


111..    .'T!'.      Trni:    Insiiiami:    roiiiv    (Ci)iitimif(l). 

Figure  279  shows  Sehedule  "B"'  of  the  jiolicy.  Under  this  soliedulc 
all  the  defects,  liens,  incumbrances  and  objections  against  which  the  com- 
pany does  not  guarantee  or  assume  any  liability  are  briefly  enumerated; 
however,  if  the  insured  desires  the  objections  to  l>e  spread  in  detail  upon 
the  schedule  it  can  be  done  by  the  company,  otherwise  resort  to  the  rec- 
ords, for  particulars,  will  have  to  be  made. 

The  conditions  under  which  the  policy  is  issued  are  as  follows: 
Policy  No.  19.')51. 

Conditions  of  This  Policy. 

1.  THE  Cr.VR.VNTEE  TITLE  AND  TRT'ST  COMP.VNY  will,  at  Us  i)wn 
cost.  i3cft>nd  the  Insured  in  all  actions  or  proceedings  founded  on  a  claim  of  title 
or  incumbrance   prior   in  date   to   this  Policy    and   not    excepted   therein. 

2.  No  claim  shall  arise  under  this  Policy,  except  under  section  1  of  these 
conditions   and   except   also   In    the    following  cases: 

(D  Where  there  has  been  a  final  determination  In  a  court  of  competent 
Jurisdiction,  under  which  the  insured  may  be  dispossessed  or  evicted  from  the 
premises  covered  by  this  Policy,  or  from  some  part  or  undivided  share  or  Inter- 
est therein. 

(in  Where  there  has  been  a  final  determination,  adverse  to  the  title,  as 
Insured.    In  such  a  court,    upon  a   lien  or  Incumbrance  not  excepted  In  this  Policy. 

(Iin  Where.  In  cases  of  guarant.^e  of  the  Interest  of  a  morlBaRoe  the  mort- 
grage  has  been  finally  adjudged,  by  such  a  court,  to  be  invalid,  or  Ineffectual  to 
charge  the  premis<s  desorlbtnl  In  this  Policy,  or  a  lien  Inferior  to  that  desig- 
nated   in   this   Policy. 

(n'>  Where  the  Insured  shall  have  transferred  the  title  Insured  by  an  Instru- 
ment containing  covenants  of  title  or  warranty,  and  there  has  been  a  final  J>idg- 
ment  rendered  in  such  a  court  against  the  Insured,  his  heirs,  executors,  admin- 
istrators, or  successors  on  any  such  covenants  or  warranty  and  because  of  some 
defect   of   title   or  Incumbrance   not   excepted   In   this   PtMlcy. 

(VI  Where  the  Insured  shall  have  contracted  in  good  faith  In  writing  to  pell 
the  Insured  estate  or  Interest,  and  the  title  has  been  rejected  because  of  some 
defect  or  incumbrance  not  excepted  in  this  Policy,  and  notice  In  writing  of  such 
n^jectlon  shall  have  been  given  to  this  Company  within  ten  days  thereafter.  For 
thirty  days  after  receiving  such  notice,  this  Company  shall  have  the  option  of 
paying  the  loss,  of  which  the  Insured  must  present  proper  proof,  or  of  maintain- 


37A  TRUST   COMPANIES. 

ing  or  defending  either  in  its  own  name  or  at  its  option  in  tlie  name  of  tlie  in- 
sured, some  proper  action  or  proceeding,  begun  or  to  be  begun  in  a  court  of 
competent  jurisdiction,  for  tlie  purpose  of  determining  tlie  validity  of  the  objec- 
tion alleged  by  the  vendee  to  the  title,  and  only  in  case  a  final  determination 
is  made  in  such  action  or  proceeding,  sustaining  the  objection  to  the  title,  shall 
this   Company   be  liable   on  this   Policy. 

(VI)  Where  a  purchaser  at  a  sale  luider  the  judgment  or  order  of  a  court 
of  competent  jurisdiction  lias  been  relieved  by  tlie  court  from  a  purchase  of  the 
insured  estate  or  interest  by  reason  of  the  existence  of  some  lien,  incumbrance 
or   some    defect    of   title    not    excepted    in  this   Policy. 

(VID  ^yhere  the  insured  shall  have  negotiated  a  loan  on  the  security  of  a 
mortgage  on  an  estate  or  intei-est  in  land  insured  by  this  Policy,  and  the  title 
shall  have  been  rejected  by  the  proposed  lender,  this  Company,  if  there  is  no 
dispute  as  to  the  facts,  will  consent  to  the  submission  of  the  question  of  the  va- 
lidity of  the  title,  as  insured,  to  the  Common  Pleas  Court  for  the  County  in 
which  is  situated  the  property  affected  by  this  Policy,  and  upon  the  judgment  of 
such    court   shall    then    depend   the    liability  of  this  Company. 

3.  In  case  any  action  or  proceeding  described  in  Section  1  of  these  condi- 
tions, is  commenced,  or  in  case  of  the  service  of  any  paper  or  pleading,  the  ob- 
ject or  effect  of  which  shall  or  may  be  to  impugn,  attack  or  call  in  question, 
the  validity  of  the  title  hereby  insured,  as  insured,  or  to  raise  any  material  ques- 
tion relating  to  a  claim  of  incumbrance  hereby  insured  against,  or  to  cause  any 
loss  or  damage  for  which  this  Company  shall  or  may  be  liable  under  or  by  vir- 
tue of  any  of  the  terms  of  this  Policy,  or  in  case  any  action  or  proceeding  is  be- 
gun that  may  have  such  object  or  effect,  it  shall  be  the  duty  of  the  insured  to 
at  once  notify  the  Company  thereof  in  writing  and  secure  to  it  the  right  to  main- 
tain or  defend  such  action  or  proceeding,  and  to  give  all  reasonable  assistance 
therein,  and  permit  it  to  use,  at  its  option,  the  names  of  the  insured.  If  such 
notice  shall  not  be  given  to  the  Company  within  ten  days  after  the  service  of 
summons  or  other  process  in  such  action  or  proceeding,  then  all  liability  of  this 
Company  in  regard  to  the  subject  matter  of  such  action  or  proceeding  shall 
cease.  Provided,  however,  that  an  assignee  for  value  of  the  Policy,  vvith  the 
consent  of  this  Company  thereon  endorsed,  shall  not  be  affected  by  such  failure 
to  notify,  if  such  assignee  through  ignorance  of  the  beginning  of  any  such  action 
or  proceeding  shall  have  been  unable  to  give  or  cause  to  'be  given  the  notice  re- 
quired by  these  conditions.  This  Company  will  pay.  in  addition  to  the  amount  of 
the  loss,  all  costs  imposed  on  the  insured  in  litigation  carried  on  by  it  for  such 
party  under  the  requirements  of  this  Policy,  but  it  will  in  no  case  be  liable  for 
the  fees  or  other  charges  of  any  counsel  or  attorney  employed  by  the  insured, 
and  the  costs  and  the  loss  paid  shall  not  together  exceed  the  amount  of  this 
Policy. 

4.  Whenever  the  Company  shall  have  settled  a  claim  under  this  Policy,  it 
shall  be  entitled  to  all  the  rights  and  remedies  which  the  insured  would  have 
had  against  any  other  person  or  property  in  respect  to  such  claim,  had  this 
Policy  not  been  made,  and  the  insured  will  transfer  or  will  cause  to  be  transferred 
to  the  Company  such  rights,  and  to  permit  it  to  use  the  name  of  the  insured  for 
the  recovery  or  defense  thereof.  If  the  payment  does  not  cover  the  loss  of  the 
insured,  the  Company  shall  be  subrogated  to  such  proportion  of  said  rights  as 
the  amount  paid  bears  to  the  amount  of  loss  not  thereby  covered.  The  insured 
warrants  that  such  rights  of  subrogation  shall  vest  in  the  Company  unaffected 
by  any  act   of   the   insiu-ed. 

5.  Nothing  contained  in  this  Policy  shall  be  construed  as  a  guarantee  against 
defects  or  incumbrances  arising  after  the  date  hereof,  or  created  or  suffered  by 
the  party  guaranteed;  nor  will  this  Company  be  liaWe  in  any  event  for  loss  or 
damage  by  reason  of  liquor  taxes;  nor  by  reason  of  taxes  or  special  assessments 
which  have  not  been  entered  upon  the  County  Auditor's  Duplicate;  nor  convey- 
ances, agreements  or  mechanic's  liens,  not  filed  or  of  record  at  the  date  hereof; 
nor  the   rights   or   claims  of   parties   in   possession   not   shown   of  record. 

6.  In  every  case  where  the  liability  of  this  Company  has  been  definitely 
fixed  in  accordance  with  these  conditions,  the  loss  or  damage  shall  be  payable 
within  thirty  days  thereafter.  Provided,  however,  that  in  every  case  this  Com- 
pany may  demand  a  valuation  of  the  estate  or  interest  insured,  to  be  made  by 
three  arbitrators  or  any  two  of  them,  one  to  be  chosen  by  the  insured,  and  one 
by  this  Company,  and  the  two  thus  chosen  selecting  the  third;  whereupon  no 
right  of  action  shall  accrue  until  thirty  days  after  notice  of  such  valuation  shall 
have  been  served  upon  this  Company,  and  the  insured  shall  have  tendered  a 
conveyance  or  transfer  of  the  estate  or  interest  insured  to  a  purchaser  to  be 
named  by  this  Company,  at  such  valuation,  less  the  amount  of  any  incumbrance 
on  said  estate  or  interest  not  hereby  insured  against,  and  this  Company  shall 
have  failed  within  that  time,  during  which  said  tender  shall  'be  kept  good,  to  find 
a  purchaser  for  the  estate  or  interest  upon  such  terms.  And  provided,  also,  that 
this  Company  shall  always  have  the  right  to  appeal  from  any  adverse  determi- 
nation; but  no  appeal  shall  operate  to  delay  the  payment  of  the  loss,  if  the  in- 
sured shall  give  to  this  Company  satisfactory  security  for  the  repayment  to  it 
of  the  amount  of  such  loss  in  case  there  shall  be  ultimately  a  determination  in 
favor  of  the  Company.  In  every  case  this  Company  shall  have  the  option  of  set- 
tling the  claim  or  paying  this  Policv  in  full;  and  the  pavment  or  tender  of  pay- 
ment to  the  full  amount  of  this  Policv  shall  determine  all  liabilitv  of  the  Com- 
pany under  it. 

7.  Any  untrue  statement  made  by  the  insured  or  his  agent  affecting  the 
subject  matter  of  this  Policy,  or  any  suppression  of  anv  material  fact,  or  any 
untrue  answer  by  the  insured  or  his  agont  to  material  inquiries,  before  the  is- 
suing of  the  Policy,  shall  avoid  the  Policv:  but  an  assignee  for  value  to  whom 
the  Policy   has  been   transferred   with  the  consent  of  the  Companv  endorsed  there- 


THE  TITLE  INSURANCE  DEPARTMENT. 


375 


on,  shall  not  be  affected  by  any  such  untrue  statements  or  answers,  or  by  such 
suppressions  or  breach  of  warranty  In  the  application,  of  which  he  was  Ignor- 
ant at  the  time  the  assent  to  the  transfer  to  him  was  endorsed  by  the  Com- 
pany. 

8.  All  payments  under  this  Policy  shall  reduce  the  amount  guaranteed  pro 
tanto.  and  no  payment  can  be  demanded  without  producing  the  Policy  for  en- 
dorsement of  such  payment.  If  the  Policy  be  lost  or  destroyed.  Indemnity  must 
be  furnished   to  the  satisfaction  of  the  Company. 

TIlis  Policy  Necesarily  BelalM  Solely  to  the  Title  Pnor  lii  ami  ladodiu  itt  M. 


Assignments  of  this  Policy  must  be  with  the  assent  of  the  Company  end(7nei  bercon.  md  lo  protect  falMa}acst 
purchasers  >s*inst  intermediate  claims  m  losses,  most  be  continued  to  dale. 

In  assenting  to  assignments  no  liability  Is  assumed  by  the  Company  for  defects  or  iacunbraooes  created  lobacqDcat 
to  the  date  of  this  Policy. 


ASSIGNMENTS  OK  POLICY. 


Oeveland.Ohlo, April    16,         ipO?  ,  For  Value  Received  I 

in  this  PoUcy  to         Bva  U.  Hubbard. 


AascDted  to    ^^ 


bereb)  aaaign  all  inlerot 


For  \'iluc  Received 


6«cr«tary. 
bereby  aaaign  all  ioterejt 


19  subject  to  foregoing  conditions. 

Thb  Gda«.\nt««'Titi.i  AMD  T«rsT  Co. 


Cle^■eIand.  Ohio,  January   8,     14  07. 

Loss,  if  any.  payable  to Charles  F.  Xau«hlln. 

interest  may  appear. 


Cleveland. 

Loss,  if  any.  payable  I 

interest  may  appear. 


Mortgagee,  as.  Jlla 
AiTD  TatTST  Ca 


The  CoAtAKTH  TrTi.«  A!c»  Tacsr  Co. 


Fig.   i?SO.— TiTi.r   TsstR.wcr   Poiicy    (Continued). 


Sometimes  the  applicant  for  insurance  requests  the  company  to  issue 
the  policy  in  the  name  of  his  grantee  of  record,  instead  of  having  the 
policy  issued  in  his  own  name,  which  request  is  usually  granted  and  also 
if  the  request  be  made  by  such  grantee  that  the  company  eliminate  from 
the   form   shown   as   Figure  277  the   words   "This  policy   iS  issued   upon 

application  by  or  on   behalf  of  the  insured  numl>ered  and   agreed 

by  all  parties  claiming  hereunder  to  be  a  warranty  of  the  facts  therein 


376 


TRUST   COMPANIES. 


stated/'  as  well  as   paragraph  7  of  the   conditions  of  the   policy  above 
shoAvn,  such  request  can  be  granted. 

In  the  form  shown  as  Figure  277  provision  is  made  to  insure  the 
assignee  provided  the  policy  is  transferred  with  the  consent  of  the  com- 
pany, wliich  consent  must  be  testified  to  by  the  signature  of  the  proper 
officers  endorsed  on  the  policy.  The  forms  of  the  assignment  of  the 
policy  are  shown  as  Figure  280. 

THE 

Guarantee  Title  and  Trust  Company, 

OK    OHIO. 


No328615. 


EXTENSION    OF 

Policy  of  Title  Insurance. 


THE  GUARANTEE  TITLE  AND  TRUST  COMPANY,  by  this  Extension  Policy  of  Title 

Insurance,  in  consideration  of  the  sum  of ,     Five   ooA  00   -^^^-^^^^-^^^^^^  Dollars 

($5.00  )  extends  its  obligations  under  Policy  of  Title  Insurance  No.     19551,      to  which  this 

is  attached,  according  to  all  the  terms,  exceptions,  stipulations  and  conditions  of  said  policy,  but  not  as 
against  the  additional  matters  setibrth  below.  — ^^^^^— — — ^— ^^^^.^— ^^^^^_— _ 


JudfTiaent  for  $100.00  damages  and  $10.13   costs,  v;ith  interest,  against 
J.  3.  Thomas,   rendered  January  Tern  1907  ,  in  case  of  W.    J.  Bower 
againat   J.   B.   Thoaas   and  others.   No.   130,625,  Execution  Docket  150, 
Pace  '71   in  Cuyahoga- County   Court  of  Comfeon  Pleas.   


The  Taxes  of  ISC. 

Special  Taxes  and  Assessments  of  any  kind,  if  ar;/. 


ntness    Whereof,     The    GrARANXEE   Title  and  Trust    Company   hath   caused   its   cor- 
porate seal  to  be  hereto  afiBxed  and  these  presents  to  be  signed  by  its  President  and  attested  by  its 

i'VMimaut  Secretar}',  this   Seventh day  of  —  March   in  the  year  of  our  Lord  one 

thousand  nine  hundred  and  seven,  at   4:01    P. 


• 


Attest 


Fig.  i?Sl. — ExTExsiox  of  Policy. 


uis«^t  Secretary 


In  assenting  to  such  assignments  no  liability  is  assumed  for  defects, 
liens  or  incumbrances  created  subsequent  to  the  date  of  the  policy. 

Tt  very  frequently  happens  that  the  owners  of  policies,  other  than 
that  of  a  mortgage  policy,  desire  that  the  original  policy  be  extended  to 
cover  a  subsequent  date.     This  can  be  done  by  either  of  two  methods: 


THE  TITLE  INSURANCE  DKi\\H  IMKNT.  377 

First — By  attaching  the  form  shown  as  Figure  !281  to  the  original 
policy,  if  there  has  been  no  change  in  the  ownership  of  the  title,  and 

Second — If  there  has  been  a  change  in  the  title,  to  cancel  and  sur- 
render the  original  policy  and  substitute,  in  lieu  thereof,  a  new  policy  in 
the  name  of  the  new  owner  with  all  the  attending  objections  as  would 
necessarily  be  shown  in  Schedule  "B"  the  form  of  which  is  shown  as 
Figure  'J7i|.  ])rovide(l,  however,  that  in  either  of  these  two  eases  notliiiig 
has  been  done  to  avoid  the  original  policy. 

A  mortgage  policy  can  not  be  extended  for  the  reason  that  the  guaran- 
tee or  liability  thereunder  is  limited,  the  company  guaranteeing  the  mort- 

Cleveland,  Ohio,  April  Twentloth  1907. 


TV.ERZkS,  PoUoy  of  Tlt.18  Ineuranoe  Ko.   19551   aal  Extonalon  thereof 
Ko.   28615,  guarunteelng  the  title  to  Sublot  Ko.  30  In  V.  C.  Leslie's  Eubdlrlslon 
of  part  of  original  One  Hundred  Acre  Lot  Ho.  491,  ao  shown  by  the  recorded  plat 
in  Vol-one  60  of  Uaps,  page  3  Cuyahoga  County  Reoorda,  Iseued  by  THE  CU/JUKTEE 
TITLE  MID  7.TJCT  COV?/jr!f,     January  8th,  1907  and  March  7th,  1907  reepectlTely, 
hsvo  been  nislali  or  lost; 

i;OW  THE.^Er03E,  In  oonslieritlon  of  THE  CRJAHAJJTEE  TITLE  AMD  TRUST 
CO'-TAiy  having  re-lasued  aaii  Policy  of  Title  Inourance  Ko.  19651  and  Extension 
thereof  Ho.  38G15,  under  Policy  Vo.  30506  and  delivered  the  sane  to  Charles  T 
Laughlin,  we  hereby  waive  all  right,  title  and  claim,   which  we  or  either  of  us 
may  have     in,  to  and  under  said  Policy  No.  19551  and  Extension  thereof  >o.  38615, 
and  do  hereby  pronlso  and  agree  to  return  said  Policy  and  Extension      so    sis- 
laid  or  lost  to  said     THE  iJDAR/JTEE  TITLE  AlID  T3U:t  COWPAST    for  surrender     sad 
car.:ellation,  should  the  caoe  ever  coce  into  our  posBesei:.-!. 


^-yt^//'\  M.<.(J^/zt^.. 


Fui.   2%2. — Rei.kase   of   Claim. 

gage  to  be  a  first  lien  on  the  premises  secured  by  the  mortgage  at  the  date 
of  record,  except  what  might  be  spread  uj^on  Schedule  "B"  shown  as 
Figure  279. 

It  may  be  well  to  note  that  in  the  event  of  loss,  destruction  or  mutila- 
tion of  a  policy,  the  company  will,  upon  satisfactory  proof  thereof,  issue 
a  duplicate  of  the  original  policy  provided  the  insured  will  waive  or  re- 
lease all  his  or  their  right,  title  and  claim  in,  to  and  under  the  or-ginal 
policy.     For  form  of  such  release  see  Figure  282. 

Carbon  copies  of  all  policies,  and  their  assignments,  issued  and  as- 
sented to  by  the  com|>any,  are  preserved,  and  a  record  of  all  such  policies 


S78 


TRUST  COMPANIES. 


and  assigrxinents  is  kept  in  a  book  especially  made  and  provided  for  that 
purpose,  termed  a  "Policy  Register,"  a  copy  of  which  is  shown  as  Fig- 
ure 283. 

Figure  283  completes  the  list  of  forms  used  in  the  issuance  of  policies 
of  title  insurance,  and  the  last  thing  now  to  be  considered  is  the  worth 
and  value  of  title  insurance  as  a  means  of  security  and  protection  to  the 
party  guaranteed  under  the  contract  with  the  company,  which  contract 
may  be  defined  to  be  an  agreement  whereby  the  insurer,  for  a  vnluablt- 
consideration,  agrees  to  indemnify  the  insured  in  a  specified  amount 
against  loss  through  defects  of  title  to  real  estate  wherein  the  latter  has 
an  interest,  either  as  owner  or  otherwise,  and  against  liens  and  incum- 
brances charging  the  same,  there  being,  however,  no  implied  agreement 
on  the  company's  part  to  go  beyond  the  conditions  of  the  title  existing  at 
the  time  the  policy  is  issued  or  to  assume  a  general  liability  to  indemnify 
against  future  liens  or  incumbrances. 


TO£  ntminu  mu  tna  nusT  cone/ 

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nucmceimR. 

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Fig.  283. — Policy  Register. 


The  form  and  method  of  such  protection  is  governed  by  the  law  of 
the  state  where  the  land  is  located,  the  title  to  which  is  guaranteed. 

In  some  localities,  before  a  company  can  issue  its  policies,  it  must 
deposit  with  the  proper  state  officials  sufficient  collateral  to  guarantee  and 
protect  the  policy  holders  against  loss  which  they  may  sustain  in  the  non- 
performance of  the  company's  contracts  of  title  insurance  with  them. 

The  deposit  required  for  such  protection,  as  above,  may  consist  of 
gold  coin.  United  States  bonds,  state  securities,  stocks,  first  mortgage 
loans  on  real  estate  and  other  approved  securities,  the  amount  and  nature 
of  which  are  regulated  entirely  by  state  legislation. 

In  addition  to  this,  further  protection  is  afforded  by  the  capital  stock 
and  assets  of  the  company. 

With  this  kind  of  assurance  a  policy  holder  may  feel  fully  protected 
in  his  investment  or  guarantee. 


CHAPTER  XIII. 
METHODS  OF  INCREASING  BUSINESS. 

CONTRARY   to  the  conditions  a  few  years  ago,  a  consideration  of 
nK'thods  of  increasing  the  business  of  a  bank  or  of  a  trust  comjjany 
at  once  suggests  the  subject  of  advertising.     The  dignity  of  the 
profession  no  longer  forbids  advertising,  although  success  in  such  adver- 
tising still  demands  dignity. 

The  successful  trust  companies  of  to-day  advertise.  Their  advertise- 
ments are  not  the  formal  and  unattractive  cards  of  former  years,  nor 
are  they  of  the  cheap  and  flaring  style  of  the  circus  poster.  Advertising, 
in  the  ordinary  signification  of  the  word,  is  of  course  not  the  only  means 
used  by  progressive  companies  for  increasing  their  business,  but  it  is  now 
firmly  established  as  one  of  the  important  means.  The  change  in  attitude 
regarding  the  expediency  of  trust  company  or  bank  advertising  has  come 
in  part  through  the  necessity  imposed  by  keen  competition,  in  part  through 
a  more  intelligent  consideration  of  the  ethics  of  the  bank  advertising 
question.  It  has  come,  too,  as  part  of  a  general  progress  in  the  art  of 
advertising.  Without  question  the  people  read  advertisements  far  more 
than  formerly.  Partly  as  a  cause  and  partly  as  a  result  of  this,  present 
day  advertisements  are  more  readable.  The  importance  of  the  advertis- 
ing column  or  pn^rc  has  increased,  and  its  quality  has  improved. 

Rkasoxs  Why  a  Trust  Company  Should  Advertise. 

The  reasons  for  advertising  on  the  part  of  a  trust  company  are  more 
numerous  and  more  forceful  than  those  for  advertisements  on  the  part 
of  a  bank.  Aside  from  the  fact  that  competition  makes  it,  in  most  locali- 
ties, fairly  a  necessity  if  the  company  wishes  to  grow,  there  are  the  facts 
that  the  trust  company  has  a  much  wider  scope  and  more  features  to 
advertise  than  has  the  bank,  and  that  the  trust  company  is  still  a  new  insti- 
tution, whose  functions  are  little  understood  by  the  people  at  large. 
Comparatively  few,  indeed,  understand  exactly  what  a  bank  can  do  for 
its  customers;  and  fewer  still  what  services  a  trust  company  can  render. 
In  the  education  of  the  public  as  to  the  extent  and  the  variety  of  the 
trust  company's  functions,  there  is  virgin  soil  for  cultivation  by  the  adver- 
tiser. 

There  is  also  a  fruitful  field  for  tlic  advertising  trust  comjiany  in  the 
seeking  of  deposits  from  people  who  have  never  had  bank  accounts. 
Nearly  everybody  has  at  least  a  little  money,  but  less  than  a  majority  of 
the  peojde  have  money  on  deposit. 

It  follows  that  some  of  the  advertising  of  the  trust  company  must  br. 
of  the  "educational"  kind;  i.  e..  must  be  devoted  to  explaining  what  a 
trust  company  is.  and  how  it  can  be  used,  and  to  inculcating  habits  of 
saving  and  thrift  among  the  people.  The  results  of  such  advertising  will 
Ihelp  the  business  of  other  companies  as  well  as  that  of  the  advertiser. 


380  TRUST   COMPANIES. 

Short-sighted,  however,  would  be  a  policy  of  refraining  entirely  from- 
such  publicity  because  of  this  fact.  In  the  end  its  effect  upon  the  busi- 
ness of  the  advertiser,  as  well  as  upon  the  business  in  general,  must  b"* 
beneficial.  The  recently  formed  "Banking  Publicity  Association"  is  doing 
a  good  work  in  seeking  to  distribute  the  burden  of  this  educational  adver- 
tising. 

The  economic  effects  of  this  form  of  publicity  by  banks  and  trust 
companies  are  of  more  than  passing  interest.  The  principles  of  economy, 
thrift,  self-denial,  abstinence  from  extravagance  are  instilled  into  the 
minds  of  the  people.  In  this  respect,  financial  institutions  are  doing  for 
the  present  generation  what  Benjamin  Franklin  did  for  his.  The  evil 
effects  of  get-rich-quick  and  other  fake  schemes  are  in  part  counteracted. 
Money  hidden  away  in  the  traditional  stocking  is  brought  into  circula- 
tion and  use,  thereby  increasing  the  available  capital  of  the  general 
public.     The  field  for  robbery  and  exploitation  is  narrowed. 

Direct  or  Individual  Advertising. 
General  writers  on  the  subject  of  advertising  divide  it  into  two  classes 
— general  advertising  and  direct  advertising.  The  former  is  designed  to 
create  a  demand  for  the  product;  the  latter,  to  make  sales  direct  from  the 
advertiser  to  the  consumer.  In  financial  publicity  the  corresponding 
classes  are  educational  and  individual  advertising.  Both  are  intended 
to  increase  the  business  of  the  advertiser,  but  it  is  evident  that  the  latter 
will,  under  favorable  conditions,  produce  this  result  the  more  directly. 
However,  it  is  an  art  which  requires  skill  and  tact.  Its  expediency  is  no 
longer  questioned  by  the  majority  of  bank  and  trust  company  officials; 
yet  it  is  a  kind  of  advertising  which  must  be  conducted  along  lines  some- 
what more  conservative  than  are  proper  for  other  kinds  of  business.  It 
need  not  and  should  not  be  unattractive  and  lifeless;  but  it  must  not  be 
in  any  way  cheap  or  sensational.  In  the  minds  of  some  of  the  people 
there  doubtless  lingers  some  question  regarding  the  propriety  of  a  bank 
advertising  for  business.  A  too  strenuous  bid  for  deposits  may  easily 
suggest  that  the  company  is  badlj'  in  need  of  funds,  and  so  tear  down 
rather  than  build  up  the  business.  Above  all,  trust  company  advertising 
must  be  thoroughly  honest  and  straightforward. 

Management  of  Advertising. 
The  larger  companies  maintain  an  advertising  department,  in  charge 
of  a  man  specially  qualified  for  the  work,  and  with  a  corps  of  stenogra- 
phers or  other  assistants.  The  man  in  charge  is  given  various  titles  by 
different  companies — Advertising  Manager,  Manager  of  Publicity,  Adver- 
tising Agent.  He  should  have  not  only  natural  qualifications  for  the 
work,  but  also  a  special  training;  for  advertising  is  a  science  the  mastery 
of  whose  principles  and  details  requires  careful  study.  The  advertising 
manager  must  understand  human  nature,  possess  common  sense,  be  a 
master  of  good  plain  English  and  have  the  knack  of  stating  things  in 
clear,  concise,  attractive  and  convincing  manner.  A  practical  training  in 
bank  or  trust  company  work  is  desirable,  and  in  any  event  he  must  thor- 


METHODS  OF  IXCREASIXG  BUSINESS.  381 

ouglily  understand  the  essential  points  of  the  trust  company  business. 
lie  should  have  a  working  knowledge  of  the  printer's  art,  know  some- 
thing of  type  faces  and  sizes,  of  engraving  processes,  of  electrotyi)ing, 
•of  qualities  and  jirices  of  jiapcrs,  understand  the  principles  of  display, 
know  how  to  read  and  correct  proof,  and  be  familiar  with  mediums  of 
advertising. 

Sometimes  the  advertising  manager  acts  also  as  Auditor  or  as  Pur- 
chasing Agent.  Frequently  in  smaller  companies  one  of  the  regular 
oflieers  is  detailed  for  this  work  as  a  part  of  his  duties.  In  any  case,  the 
work  should  be  in  charge  of  one  man  who  makes  it  his  business  to  attend 
tc  it.  If  left  to  be  looked  after  by  any  one  of  the  officers  who  may 
hapjnn  to  think  of  it,  as  is  the  jiractice  in  some  companies,  the  inevitable 
result  is  advertising  of  a  spasmodic  and  ineffective  kind. 

In  small  companies,  having  but  one  active  officer,  the  advertising  will 
of  course  be  one  of  the  many  duties  of  that  officer,  but  a  duty  which  he 
•must  attend  to  systematically  if  his  institution  is  to  grow. 

The  recoids  of  the  advertising  de))artiuent  are  simj)le,  and  few  in 
number,  but  should  be  devised  and  ke})t  with  c.are.  Samples  should  In- 
kept  of  all  advertising  matter  issued,  scrap-books  being  i)rovided  for 
advertisements  ai)j)earing  in  )>eriodicals.  foUow-uj)  letters,  etc.,  and  files 
for  circulars,  booklets  and  novelties.  A  diary  or  journal  should  be  kept, 
showing  what  advertising  matter  is  sent  to  persons  on  the  advertising 
lists,  and  when  sent,  and  recording  any  matters  about  which  it  may  in 
the  future  be  essential  to  have  exact  information.  A  record  of  results 
of  advertising  campaigns  is  desirable,  and  to  this  record  the  other  de- 
])artments  of  the  company  will  need  to  contribute  lists  of  new  accounts, 
new  trusts,  new  safe  deposits  renters,  etc.,  traceable  to  advertising.  The 
<Iei)artment  needs  a  Tickler,  cards  being  most  convenient  for  the  purpose. 

The  advertising  lists  are  kept  on  cards,  of  which  two  forms  are  shown 
in  Figures  281  and  285,  the  cards  being  arranged  alphabetically  in  cases 
or  draM-ers  of  cabinets.  It  is  usually  desirable  to  have  separate  lists  of 
different  classes  of  people,  and  this  may  of  course  be  done  by  having 
the  cards  for  each  list  filed  in  a  separate  case.  Often  also  it  is  best 
to  have  separate  lists  of  the  "prospects"  of  eaeli  department.  The 
division  into  classes  may  still  be  maintained  when  all  the  cards  are  filed 
together  aljjhabotically,  either  by  using  different  colored  cards  for  the 
different  classes,  or  by  using  tabs  at  the  tops  of  the  cards,  as  shown  in 
Figure  281, — all  the  tabs  IxMiig  cut  off  each  card  except  the  one  wanted. 
A  more  elalxirate  classification  may  be  obtained  by  a  combination  of  the 
two  methods,  using  cards  with  tabs,  printed  in  different  colors.  The 
filing  of  all  the  cards  in  one  list  is  a  ]>rotection  against  duplication  of 
names,  which  should  be  carefully  avoided. 

In  Figure  281.  the  consecutive  numbers  at  the  bottom  of  the  card 
refer  to  the  advertising  matter  sent  to  the  person  named  on  the  card, 
the  scrap-books  or  diaries  showing  what  was  included,  for  instance,  in 
advertising  matter  number  .">.  Wiicn  the  matter  is  mailed,  either  a  check- 
mark or  the  date  is  inserted  in  the  little  square  which  shows  the  corre- 


382 


TRUST   COMPANIES. 


spending  nuinbei*.  The  provision  for  9^  nnnibers  on  the  card  does  not 
mean  that  so  man}'  advertisements  are  apt  to  be  sent  to  each  "i^rospect"; 
but  a  given  person  may  receive  Nos.  2,  5,  7,  etc.  Space  is  left  at  the 
right  of  the  card  for  a  record  of  letters  sent  to  or  received  from  the 
"prospect",  and  additional  memoranda  may  be  made  on  the  back  of  the 
card.  Figure  285  is  self-explanatory.  The  record  on  the  lower  half  of 
the  card  is  continued  on  the  back.  The  size  of  the  cards  is  3x5  inches. 
The  preparation  of  mailing  lists  is  a  laborious  and  important  part 
of  the  work,  and  should  be  handled  with  great  care  to  select  the  names 
judiciously,  to  have  the  names  and  addresses  correct,  and  to  recognize 
the  cards  of  those  who  become  customers  or  whose  mail  is  not  delivered. 
The  sources  from  which  the  lists  may  be  compiled  include  lists  of  mem- 
bers of  clubs,  societies,  organizations,  churches,  women's  clubs,  mercan- 


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tile  agency  registers,  city  and  telephone  directories,  voters'  lists,  lists  of 
teachers,  policemen,  firemen,  attorneys,  business  houses,  permanent  resi- 
dents of  hotels  and  apartment  houses,  post  office  and  rural  free  delivery 
lists  when  obtainable,  acquaintances  of  directors,  officers  and  employees, 
persons  who  answer  advertisements.  One  company  when  starting  busi- 
ness in  New  York  city  employed  men  to  go  through  the  city  directory 
and  compile  selected  lists  of  names.  Special  or  temporary  lists  of  various 
kinds  are  made  up  from  time  to  time  as  occasion  arises. 


Planning  an  Advertising  Campaign. 

The  best  results  are  obtained  by  carefully  planning  in  advance  the 
main  features  of  the  advertising  campaign  for  the  year.  A  definite  sum 
should  be  available  for  the  purpose,  but  should  not  be  exhausted  by  the 
plans  made  at  the  start — a  sufficient  amount  being  left  for  emergencies^ 


METHODS  or   INCREASING  BUSINESS. 


383 


Too  much  must  not  be  expected  in  the  way  of  immediate  results;  and, 
indeed,  although  effort  should  be  made  to  form  an  estimate  of  the 
amount  of  business  that  comes  through  the  advertising,  it  must  be  recog- 
nized that  it  is  utterl}'  impossible  to  weigh  such  results  with  exactness. 

Tlie  plans  should  provide  for  advertising  that  is  continuous  and  per- 
sistent, remembering  that  it  is  constant  dropping  that  wears  away  stone, 
and  persistent  advertising  that  brings  business.  Little  result  is  to  be 
expected  from  spasmodic  and  irregular  advertising;  it  lacks  in  force  and 
in  cumulative  effect.  Continuous  and  systematic  publicity  stamps  upon 
the  minds  of  the  public  the  name  of  the  company  and  the  inducements 
which  it  offers.  The  man  who  sees  the  advertisement  of  a  given  trust 
company  daily  comes  to  feel  that  he  is  acquainted  with  it  and  knows  its 
strength  and  facilities.     Another  thing  that  argues  for  having  advertise- 


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mcnts  always  before  the  public  is  the  fact  that  people  are  earning  money 
every  day,  and  either  saving  or  spending  it. 

There  is  an  advantage  in  adopting  a  suitable  emblem,  analogous  to 
a  trademark,  to  appear  in  all  the  company's  advertising,  including  news- 
paper and  magazine  advertisements,  circulars  and  stationery.  Such 
emblems  are  in  use,  with  marked  success,  by  a  number  of  prominent  banks 
and  trust  companies.  The  emblem  may  be  a  neat  picture  of  the  com- 
pany's building,  a  distinctive  style  of  type,  a  simple  design  suggesting 
the  name  or  location  of  the  company ;  or  it  may  be  an  attractive  design 
selected  arbitrarily.  Its  use  tends  to  give  individuality  to  the  advertising 
and  to  familiarize-  readers  with  the  advertiser's  name  and  business.  In 
the  use  of  emblems,  however,  care  should  l>e  used  lest  all  advertisements 
appear  too  much  alike,  thus  causing  the  reader  to  pass  them  by  with  the 
idea  that  he  has  already  read  them. 

It  should  be  a  part  of  the  plan  to  use  only  good  qualities  in  everything 
— paper,   printing,   illustrations,   etc.      A   circular   well   printed   on    good 


384  TRUST   COMPANIES. 

paper  costs  no  more  for  postage  if  sent  by  mail  than  a  cheap  circular; 
while  its  possibilities  for  good  are  immeasurably  greater.  The  public 
instinctively  associates  cheap  advertising  with  second-rate  concerns. 

Mediums  of  Advertising. 
An  important  part  of  the  plan  of  campaign  is  the  selection  of 
mediums.  Nothing  illustrates  more  forcibly  the  change  that  has  taken 
place  in  the  matter  of  financial  advertising  than  the  number  of  different 
mediums,  good  and  bad,  which  are  to-day  used  for  advertising  banks  and 
trast  companies.    Among  them  are: 

Newspapers,  daily  and  weekly. 

Magazines    and    illustrated   weeklies. 

Financial  periodicals. 

Circulars,   booklets,   statements,    cards,  monthly  papers. 

Pay-roll  envelopes. 

Personal  and   form  letters. 

Cards  in  street-cars  and  suburban  cars. 

Window  exhibits. 

Signs,  electric  and   other,  on   the  building. 

Bill-boards  and  other  fonris  of  out-door  advertisements. 

Calendars,   blotters,   wallets  and   other  novelties  and  souvenirs. 

Newspapers. 

Experts  in  financial  advertising  seem  practically  agreed  that  for  local 
business  the  daily  newspaper  (or  the  weekly  newspaper  in  small  towns 
having  no  daily)  is  the  best  single  medium  of  advertising,  because  it 
reaches  more  people  at  a  less  cost  per  capita  than  any  other  medium,  and 
because  it  is  the  place  that  people  expect  to  find  the  advertisements  of  all 
live  concerns.  They  are  also  agreed  that  newspaper  advertisements  must 
be  supplemented  by  circulars  and  booklets.  As  to  the  proper  propor- 
tions of  the  two  mediums  opinion  is  not  so  unanimous,  and  the  question 
is  largely  affected  by  local  conditions. 

In  cities  where  there  are  several  daily  papers,  it  is  important  to  select 
the  right  ones.  The  important  considerations  are,  a  wide  circulation  and 
the  reaching  of  the  class  or  classes  of  people  from  whom  business  is 
desired.  Frequently  it  is  wise  to  use  all  of  the  local  papers.  As  between 
morning  and  evening  papers,  the  latter  have  the  advantage  of  being  more 
apt  to  be  taken  home  and  to  be  read  by  all  members  of  the  family.  Oft- 
times  it  is  useful  to  advertise  in  papers  published  in  German  or  other 
foreign  language,  being  careful  to  have  the  advertisement  written  in 
the  same  language  as  the  reading  matter  of  the  paper. 

The  frequency  of  the  advertisements  in  each  paper  will  depend  largely 
upon  the  number  of  papers  used.  A  common  practice  is  to  have  the 
advertisement  appear  two  or  three  times  a  week  in  each  paper.  The 
space  used  is  generally  two,  three  or  four  inches,  although  much  larger 
spaces  are  occasionally  employed. 

ClRCUL/VRS    AND    BOOKLETS. 

Circulars  and  descriptive  booklets  are  being  issued  in  great  profusion 
by  trust  companies  all  over  the  country.     Their  usefulness  is  unques- 


METHODS  OF   IXCREASIXG  BL'SINESS.  385 

tioned,  but  its  degree  depends  upon  several  things,  among  them  being  the 
familiarity  which  the  people  have  with  such  literature.  It  is  evident,  for 
instance,  that  a  given  booklet  will  attract  more  attention  in  communi- 
ties where  such  tilings  are  novelties  than  it  will  where  every  trust  com- 
pany has  been  issuing  them  for  years.  In  the  latter  case,  the  law  of  the 
survival  of  the  fittest  is  more  in  evidence. 

It  is  customary  to  have  one  booklet  treating  briefly  of  all  the  depart- 
ments of  the  company,  and  one  booklet  on  each  of  the  departments — 
banking,  savings,  trust,  safe  deposit,  bond,  foreign  exchange,  real  estate, 
etc.  In  addition,  circulars  are  often  prepared,  each  of  which  treats  of 
some  one  function,  or  one  aspect  of  a  function,  of  the  company;  e.  g., 
trustee,  executor  or  administrator,  guardian,  agent,  registrar,  collections, 
wills,  managemtait  of  real  estate,  savings  accounts,  checking  accounts, 
safe  deposit,  storage  of  silverware,  storage  of  furs,  letters  of  credit, 
interest  on  accounts.  Educative  ideas  like  the  value  of  the  habit  of  saving 
furnish  the  subjects  of  many  little  booklets.  Circulars  are  issued  directed 
to  special  classes  of  people — young  men,  teachers,  firemen,  policemen, 
farmers,  actors,  married  women,  working  girls,  foreigners — circulars  for 
the  last-named  being  written  in  various  foreign  languages.  Many  com- 
panies, particularly  in  towns  and  smaller  cities,  find  it  useful  to  publish 
a  little  monthly  paper,  distributed  gratis,  containing  such  general  matter 
as  will  interest  the  readers  together  with  educational  and  direct  advertise- 
ments. Most  companies  publish  in  circular  form  their  regular 
statements  as  called  for,  but  comparatively  few  get  full  advertising  value 
from  them.  The  ordinary  bank  or  trust  company  statement  has  no  mean- 
ing to  the  lay  reader,  and  therefore  no  interest.  But  if  the  statement  be 
explained  and  put  in  plain  English,  excluding  technical  terms,  it  may  be 
made  a  valuable  advertising  medium. 

Important  results  have  been  obtained  from  pay-roll  envelopes  fur- 
nished free  to  large  employers  of  labor,  having  printed  on  their  face  a 
few  well-chosen  words  on  the  value  of  systematically  saving  a  part  of 
one's  salary  or  wages  and  depositing  it  in  the  Blank  Trust  Company. 
One  large  savings  hank  uses  over  two  millions  of  such  envelopes  each 
year,  and  finds  it  a  good  investment. 

There  are  numerous  ways  in  which  circulars  and  booklets  may  be 
distributed.  The  most  common  ways  are  by  sending  them  to  persons  on 
the  mailing  lists  and  by  placing  them  on  the  desks  and  in  racks  in  the 
office  so  that  people  may  help  themselves.  For  the  purpose  of  mailing 
it  is  well  to  remember  to  have  the  booklets  of  a  size  and  weight  that  will 
permit  their  being  placed,  perhaps  with  a  letter,  in  an  ordinary  size 
envelope,  and  carried  for  one  staniji.  Mailing  cards  are  coming  to  be 
used  for  this  purpose. 

A  little  thought  will  suggest  other  ways  in  which  the  circulars  may 
be  distributed.  The  officers  and  clerks  may  carry  a  small  supply  in  their 
pockets  and  hand  them  out  as  favorable  opportunity  occurs.  They  may 
be  mailed  with  interest  notices,  with  notices  of  safe  deposit  rent  due, 
with  notices  to  send  in  pass-books  for  entry  of  interest.  When  pass- 
25 


S86  TRUST   COMPANIES. 

books  are  balanced  and  ready  for  delivery,  there  is  an  excellent  oppor- 
tunity to  enclose  in  the  book  a  neatly  printed  slip  calling  attention  to 
the  fact  that  the  company  is  making  every  effort  to  render  good  service, 
asking  for  criticisms  if  the  service  has  been  in  any  way  unsatisfactory^ 
and  inviting  the  customer  to  bring  in  his  friends. 

Magazines,  Etc. 

Magazines,  illustrated  weeklies  and  other  periodicals  whose  circula- 
tion is  general,  not  local,  are  used  when  a  banking-by-mail  business  is 
sought.  In  this  field  the  selection  of  mediums  is  of  supreme  importance, 
and  the  advertising  manager  needs  to  thoroughly  inform  himself  as  to 
the  bona  fide  circulation  of  each  periodical  considered,  the  classes  of 
people  it  reaches,  and  the  localities  in  which  its  circulation  is  greatest. 
The  opportunity  is  large  to  waste  money  by  placing  advertisements  in 
mediums  that  do  not  circulate  among  the  people  wanted. 

Financial  Periodicals. 

Financial  periodicals  are  the  mediums  employed  when  advertising 
specially  for  accounts  of  banks  and  other  trust  companies. 

Letters. 

Personal  letters,  and  form  letters  which  are  written  as  personal  let- 
ters, are  being  widely  used,  and  when  intelligently  written  and  handled 
prove  a  very  valuable  advertising  medium.  They  are  sent  to  persons  on 
the  regular  advertising  lists  and  to  selected  lists  made  up  from  time  to 
time.  For  instance,  brief  letters  showing  the  value  of  opening  savings 
accounts  for  the  children  in  the  family  may  be  sent  to  parents  of  new- 
born babies,  the  names  being  obtained  from  the  birth  lists.  The  subjects 
treated  in  the  letters  may  be  the  same  as  those  covered  in  booklets,  but 
are  treated  briefly  and  in  letter  style.  Some  of  the  letters  are  direct 
invitations  to  open  accounts.  The  "follow-up"  system  is  generally  used; 
i.  e.,  new  letters  are  sent  out  at  regular  intervals  until  the  "prospect" 
becomes  a  customer  or  is  evidently  not  to  be  reached  by  this  method  of 
advertising. 

The  plan  being  that  these  letters  should  partake  of  the  character  of 
personal  letters,  care  must  be  taken  to  adhere  to  the  plan  in  every 
respect.  The  best  way  is  to  have  each  letter  written  separately  by  a 
corps  of  typewriter  operators.  If  this  is  impracticable,  the  letters  should 
be  printed  by  a  printer  who  makes  a  specialty  of  such  work  and  under- 
stands his  business.  Carbon  copies  or  poorly  mimeographed  copies  should 
never  be  used.  The  letters  should  be  personally  signed  in  ink  by  an 
officer  of  the  company,  rubber  stamp  signatures  being  avoided.  They 
should  be  sent  out  as  first-class  mail  matter.  Unless  these  precautions 
are  taken,  it  is  better  to  have  the  letters  printed  as  circulars  without  any 
pretence  of  being  personal  letters.  Such  circulars  will  have  a  better 
effect  than  "personal"  letters  which  proclaim  upon  their  faces  that  they 
are  not  v/hat  they  pretend  to  be. 


METHODS  or   INCREASING  BHSINESS.  387 

Other  Mediums  of  Publicity. 

Advertising  cards  in  street  cars  are  extensively  used  in  most  citiea. 
They  offer  space  for  only  a  brief  message  or  reminder;  but  they  are 
before  the  eyes  of  people  who  usually  have  nothing  to  do  except  to  read 
such  cards.  Even  the  man  who  makes  it  a  habit  to  read  his  paper  or  a 
book  on  the  oar  has  times  when  he  has  finished  his  reading  or  wearies  of 
it,  and  lets  his  eyes  glance  at  the  advertising  cards.  Care  must  be  taken 
to  have  the  type  used  in  these  cards  large  and  plain  enough  to  be  read 
with  ease.  It  is  to  be  observed  that  this  medium  of  advertising  reaches 
only  those  who  use  the  cars,  and  is  available  mainly  in  cold  weather 
when  closed  cars  are  in  use.  Care  should  be  taken  to  select  car  lines 
patronized  by  persons  who  would  find  the  office  of  the  advertiser  con- 
venient.    Copy  for  these  cards  must  be  changed  frequently. 

Window  exhibits  are  used  by  many  companies.  They  may  consist  of 
collections  of  coins  or  currency,  a  check  or  draft  of  unusual  amount,  a 
picture  or  model  of  the  company's  new  building,  the  last  statement  of  the 
company,  especially  if  explained  in  detail,  a  comparative  statement  show- 
ing growth,  an  enlarged  photographic  reproduction  of  a  savings  pass- 
book showing  how  an  account  increases  by  persistent  saving,  etc.  One 
attractive  exhibit  was  made  of  an  hour-glass  accompanied  by  a  statement 
of  the  amount  of  interest  earned  by  savings  depositors  during  the  hour 
required  for  the  sand  to  run  out  of  the  upper  half.  Care  must  be  taken 
to  have  such  displays  not  too  sensational.  It  is  to  be  noted,  too,  that 
some  companies  arc  so  located  that  it  might  bring  danger  of  a  "run" 
to  have  a  crowd  gather  about  the  window. 

The  signs  on  the  building  occupied  by  the  company  should  be  distinct 
enough  so  that  an  ignorant  person  looking  for  the  office  will  have  no 
difficulty  in  finding  it.  There  is  also  a  value  in  signs  conspicuous  enough 
to  attract  attention  of  the  general  public,  provided  a  reasonable  amount 
of  dignity  is  maintained.     In  some  cities  electric  signs  at  night  are  used. 

Calendars,  blotters,  wallets,  rulers  and  various  novelties  are  exten- 
sively used,  although  their  value  is  questioned  by  many  advertising  man- 
agers. It  sometimes  happens  that  even  when  the  advertising  value  of 
such  things  is  known  to  be  small,  it  is  advisable  to  invest  in  them  in  order 
to  retain  good  will  or  to  follow  a  custom  established  in  a  community,  the 
failure  to  follow  which  by  any  one  company  would  hurt  its  business. 
Companies  located  in  small  cities  or  towns  or  in  the  outskirts  or  small 
business  centers  of  cities  doubtless  are  under  a  greater  necessity  of 
using  this  kind  of  advertising  matter  than  are  the  large  companies  at 
the  business  centers  of  the  principal  cities. 

In  common  with  other  concerns,  trust  companies  are  continually 
asked  to  buy  advertising  space  in  programmes,  cook-books,  monthly 
church  or  lodge  papers  and  other  printed  matter  issued  by  churches,  clubs, 
societies,  etc.  The  opinion  seems  to  be  pretty  general  and  pretty  definite 
that  such  things  are  practically  worthless  as  advertising  mediums.  It  is 
nevertheless  often  advisable,  if  not  necessary,  to  take  space  in  such  pub- 


S88  TRUST   COMPANIES. 

lications,  not  as  real  advertising,  but  as  a  gift  to  gain  or  keep  the  good 
will  of  the  persons  interested. 

Pehsonal  Efforts  by  Officeus,  Stockholders  and  Others. 

Besides  advertising  in  the  more  technical  and  restricted  sense,  there 
are  many  other  means  through  which  a  company  may  make  itself  well 
and  favorably  known  to  possible  patrons.  The  first  of  these  is  the  oldest, 
and  at  one  time  practically^  the  only,  means  of  publicity — through  the 
personal  efforts  of  the  officers.  This  is  still  one  of  the  important  means. 
Through  membership  in  clubs,  societies,  churches  and  participation  in 
other  business  enterprises,  the  trust  company  officer  has  splendid  oppor- 
tunities of  bringing  business— opportunities  which  are  fruitful,  other 
things  equal,  in  proportion  to  his  personal  popularity,  ability  and  reputa- 
tion for  integrity. 

In  some  parts  of  the  country,  special  solicitors  have  been  employed  to 
bring  in  new  accounts.  Thej'^  are  usually  given  an  official  title  for  the 
sake  of  having  a  better  standing  in  approaching  people.  Their  task  is 
one  requiring  great  skill  and  care. 

The  directors  ought  to  be  the  source  of  much  new  business.  They 
should  be  kept  in  touch  with  the  progress  of  the  company,  with  its  plans 
and  prospects,  the  lines  of  work  it  is  undertaking,  and  be  filled  so  full 
of  information  and  enthusiasm  that  they  can  and  will  tell  their  friends 
about  it.  Men  should  be  elected  to  the  directorate  who  will  give  to  their 
duties  enough  time  and  attention  to  keep  informed  as  to  what  is  going 
on,  and  who  have  enough  interest  in  the  company  to  use  every  oppor- 
timity  to  build  up  its  business. 

By  properl}'^  directed  efforts  the  stockholders  may  be  made  an  import- 
ant means  of  building  up  the  business.  Some  companies  have  built  up  a 
large  line  of  business  simply  by  interesting  the  stockholders  in  the  work. 
They  really  have  important  reasons  for  maintaining  an  active  interest 
in  the  company's  affairs,  and  but  little  effort  is  needed  to  arouse  such 
interest  and  make  it  result  in  new  business  for  the  company.  The  essen- 
tial thing  is  to  keep  in  constant  touch  with  them,  by  letters,  personal 
interviews,  frequent  meetings,  providing  them  with  samples  of  all  import- 
ant advertising  matter,  and  treating  them  as  partners  in  the  enterprise 
rather  than  as  outsiders  having  no  interest  other  than  the  semi-annua! 
receiving  of  dividends  and  the  annual  sending  of  proxies.  One  enter- 
prising bank  president  got  his  stockholders  together  every  three  months 
for  a  smoker — and  the  business  showed  the  results. 

Many  depositors  (assuming  that  they  are  well  treated)  will  be  found 
ready  to  help  in  building  up  the  business,  if  they  are  asked  to  do  so.  An 
excellent  custom  is  in  vogue  among  some  companies,  of  writing  a  personal 
letter,  signed  by  the  executive  officer,  to  each  new  depositor,  thanking 
him  for  his  account,  assuring  him  of  the  desire  to  render  efficient  service, 
and  expressing  a  hope  that  the  new  relations  may  be  profitable  and  last- 
ing. This  makes  the  depositor  feel  welcome,  but  must  be  backed  up,  of 
course,  by  courteous  personal  treatment.     From  time  to  time  means  should 


MKTIIODS  OF   IN(UKAS1N(.   lU  SINKSS.  389 

be  devisfd  of  keeping  in  toucli  witli  all  depositors,  to  make  tlicni  feci 
that  they  are  appreciated  and  wanted.  The  trust  company  has  an  oppor- 
tunity, if  it  will  use  it,  to  build  up  each  department  from  among  the 
customers  of  the  other  departments,  by  seeing  that  they  are  posted  as  ti 
all  the  services  the  company  can  render  them. 

The  various  employes  of  the  comj)any  have  friends  and  acquaintances 
from  whom  they  could  get  accounts,  if  encouraged  to  do  so.  Some  com- 
panies oft'er  jjrizes  each  year  to  employes  for  new  business  obtained, 

RESULTS  OF  Audits  and  Examinations, 

Audits  offer  opportunities  for  effective  advertising  that  should  be 
utilized.  When  a  thorough  audit  of  a  trust  company  has  been  made  hy 
a  responsible  audit  concern,  and  matters  found  in  good  condition,  every 
reasonable  means  of  advertising  the  fact  should  be  employed;  for  it 
has  a  very  strong  tendency  to  prove  to  the  public  mind  that  the  company 
is  solid  and  trustworthy.  If  a  good  auditing  department  is  maintained, 
t!»e   fact   should   be  advertised. 

Treatment  of  Customers. 

Witliout  doubt  the  most  effective  means  of  building  up  a  trust  com- 
pany's business  is  found  in  fair  and  courteous  treatment  of  all  persons 
with  whom  the  company  has  any  dealings.  Without  it,  no  amount  of 
advertising  or  of  personal  solicitation  will  avail  to  greatly  increase  the 
number  of  customers.  The  best  of  all  advertisements  is  a  pleased  cus- 
tomer; a  customer  pleased  not  because  he  has  "worked"  the  company  for 
special  accommodations,  but  because  he  has  been  treated  with  uniform 
courtesy  and  fairness  and  his  business  has  been  cared  for  with  prompt- 
ness, intelligence  and  accuracy.  He  is  almost  certain  to  bring  his  friends' 
to  the  institution  which  has  rendered  him  such  services,  and  may  be  relied 
upon  as  a  life-long  customer,  and  a  patron  of  all  the  departments.  Cour- 
tesy and  efficient  service  must  be  the  cardinal  principles  governing  the 
administration  of  the  trust  company  that  would  build  up  and  maintain 
an  ever-increasing  business.  With  these  principles  the  whole  office  force 
must  be  imbued ;  for  in  their  practice  every  employe  from  office-boy  \c 
president  must  co-operate.  Grouchy  and  unaccommodating  tellers,  book- 
keepers and  clerks  may  easily  drive  away  more  business  than  the  adver- 
tising department,  officers  and  directors  can  bring.  The  whole  atmospher-j 
of  the  offices  must  be  filled  with  the  spirit  of  welcome  and  cheerfulness. 

Office  Equipment. 

This  spirit  is  expressible  not  only  in  the  personal  attitude  of  the 
officers  and  employes,  but  also  in  the  furnishing  and  equipment  of  the 
offices.  These  should  be  attractive  and  cheerful,  containing  conveniences 
of  various  kinds  for  customers.  The  most  up-to-date  offices  provide 
couches,  writing  tables,  telephones,  reading  matter  and  other  facilities 
especially  for  customers.  A  ladies'  department  is  maintained,  frequently 
in  charge  of  a  matron  who  looks  after  the  wants  of  women  customers. 


SPO  TRUST  COMPANIES. 

New  currency  is  paid  out  bv  the  tellers.  An  excellent  plan  is  to  have  ao 
ofKcial  in  the  lobby  with  no  other  duties  than  to  look  after  the  interests 
of  customers,  answer  questions,  direct  people  to  the  proper  windows. 
Nothing  is  so  disagreeable,  especially  to  a  timid  person,  as  to  be  sent  from 
window  to  window  to  find  the  proper  place  to  transact  his  business. 

Increasing  Trust  Department  Business. 

While  the  methods  already  described  will  in  course  of  time  build  up 
the  business  of  the  trust  department  along  with  that  of  the  balance  of 
the  institution,  it  is  of  course  desirable  to  make  special  effort  to  in- 
crease the  patronage  of  this  department.  The  greater  part  of  its  busi- 
ness will  come  from  satisfied  customers  of  other  departments;  and  little 
progress  can  be  made  in  securing  trust  business  until  the  company  has 
established  a  reputation  for  solidity  and  for  skill  in  the  handling  of 
business.  These  two  things  are  the  most  forceful  arguments  for  the 
selection  of  the  tnist  compan^y  to  handle  fiduciary  business-,  and  the  com- 
pany which  is  seeking  such  business  must  be  prepared  to  show  that  it 
excels   in  these  particulars. 

In  seeking  business  of  a  fiduciary  character,  it  is  essential  to  bear 
in  mind  that  this  is  the  part  of  the  trust  company's  functions  which  is 
least  understood  by  the  general  public.  The  time  will  doubtless  come 
when  the  usual  practice,  both  among  persons  of  large  means  and  per- 
sons of  small  means,  will  be  to  use  the  trust  companj''  as  executor  of  their 
v/ills,  trustee  of  their  estates,  etc.;  but  at  present  the  custom  is  to  use 
the  services  of  individuals  for  such  purposes.  Those  who  are  thoroughly 
informed  on  the  subject  understand  the  great  superiority  of  the  trust 
compau}^  for  such  duties;  but  such  people  are  decidedly  in  the  minority, 
and  most  persons  either  do  not  know  that  the  trust  company  is  em- 
poAvered  and  equipped  to  do  the  work,  or  else  do  not  know  that  they 
have  any  better  facilities  for  its  performance  than  have  individuals.  The 
chief  problem  before  this  department,  therefore,  is  the  education  of  the 
public  on  the  functions  of  the  trust  company  and  on  its  special  qualifica- 
tions for  the  exercise  of  those  functions.  In  some  cases  the  educative 
work  must  go  still  further,  as,  for  example,  in  teaching  the  importance 
of  making  a  will  now  or  else  of  providing  for  the  distribution  of  one's 
estate  by  the  creation  of  trust  funds  before  death. 

As  a  preliminarv  step,  attractive  circulars  should  be  })rintcd  which 
describe  the  work  of  the  dei^artment.  There  should  be  one  circular 
stating  briefly  but  clearly  all  of  the  various  duties  Avhich  the  department 
is  authorized  and  prepared  to  undertake.  This  should  be  supplemented 
by  separate  booklets,  each  of  which  treats  more  fully  of  a  particular 
function,  such  as  acting  as  executor,  or  guardian,  or  trustee.  These  cir- 
culars may  be  mailed  to  selected  lists  of  people,  may  be  placed  in  racks 
prominently  located  in  the  company's  offices,  and  may  be  given  out  per- 
sonally to  individuals  who  ask  for  information  or  who  are  known  to  be 
interested.     ^Vhen  a  person  asks  about  any  of  these  functions,  he  or  she 


METHODS  OF  INXREASIXG  BL'SIXESS.  391 

should   ])f   iiilrofhut'd   to   tlic   trust   oHict  r.   who   should    Inkr   the   time    ti) 
thoroughly  c.\'i)lain  tiie  advantages  offered   by  the  company. 

A  proj)er  proportion  of  the  newspaper  advertisements  of  the  com- 
]",any  should  he  devoted  to  the  work  of  the  trust  department,  and  be 
educative  in  character.  In  all  advertising  devoted  to  this  department, 
it  should  be  shown  that  the  charges  madq  by  the  trust  company  do  not 
t'xceed  those  made  by  individuals,  and  are  often  smaller.  Unless  this 
is  done,  the  claims  made  for  superiority  of  services  and  security  may 
ler.d  to  the  im])ression  that  the  fees  are  correspondingly  higher. 

For  the  reason  already  suggested,  that  the  performance  of  fiduciary 
work  by  other  than  natural  i)ersons  is  in  most  communities  a  new  thing. 
s{)ecial  imi)ortance  is  attached  to  cretting  a  start  in  such  business.  No 
one  thing  will  so  influence  the  jieople  of  a  community  towards  using  the 
trust  comjiany  for  such  duties  as  the  knowledge  that  some  of  their 
prominent  fellow  citizens  are  already  doing  so.  It  is  therefore  of  prime 
importance  to  thoroughly- -but  wisely  and  carefully — advertise  the  fact 
when  an  imjjortant  trust  has  been  handled.  This  can  be  done  in  news 
items  as  well  as  by  paid  advertisements.  If,  for  example,  The  Blank 
Trust  Company  is  acting  as  assignee  of  Doe  and  Roe.  the  public  is  in- 
terested in  the  jirogress  of  the  work,  and  the  press  will  be  glad  to  have 
frequent  news  items  regarding  it.  Such  jjublicity  Mill  imjjress  upon  the 
uinds  of  the  public  the  fact  that  trust  companies,  and  The  Blank  Trust 
Company  in  particular,  act  as  assignees.  So  if  John  Smith  has  ap- 
pointed The  Blank  Trust  Company  executor  of  his  will,  the  more  widely 
lilt  fact  is  knoMn  the  better.  The  fact  that  the  late  Marshall  Field  of 
Chicago  chose  trust  companies  as  executors  of  his  will  and  custodians  of 
the  vase  funds  left  by  him  in  trust,  weighs  more  with  most  peoi)le  than 
^ny  numlvr  of  arguments  on  the  subject. 

A  nitural  source  of  trust  work  at  the  beginning  is  from  the  di- 
rectors and  stockholders  of  the  eomjiany.  Some  of  them  can  l)e  ap- 
])roached  on  the  subject  directly;  others  can  be  influenced  indirectly  by 
filling  them  with  information  on  the  subject  and  setting  them  to  work 
t)  interest  others. — a  jjrocess  which  will  readily  suggest  to  them  that 
they  might  themselves  make  use  of  the  trust  department.  While  from 
one  point  of  view  trusts  so  received  are  not  as  good  for  advertising 
]nirposes  as  those  received  from  outsiders,  they  carry  nuich  weight  as 
evidences  that  the  directors  of  the  eom]>any  dis})lay  absolute  confidence 
in  the  solidity  and  facilities  of  their  own  institution,  about  which  it  is 
presumed  they  have  inside  information. 

In  many  comnninities  it  is  feasible  to  have  published  in  the  local 
pajiers,  Sunday  or  other,  "feature"  articles  treating  of  the  progress  of 
tl)e  trust  company  as  a  quasi-public  institution,  aiul  explaining  its  work 
and  the  advantages  which  it  offers. 

Most  comi)anies  make  a  practice  of  preparing  wills  free  of  charge 
in  cases  where  they  arc  made  executors  of  same.  An  advertisement  on 
llie   subject   gives   a    good    chance    to   discuss    the    iinjiorlance    of   making 


392  TRUST   COMPANIES. 

wills,  and  to  call  attention  to  the  fact  that  the  company  acts  as  executor 
and  trustee. 

It  is  of  great  importance  to  cultivate  the  friendshija  of  the  legal 
fraternity.  While  it  is  true  that  the  trust  company  is  gaining  some  of 
the  business  that  has  been  handled  largely  by  members  of  the  bar,  it  is 
true  on  the  other  hand  that  they  must  and  do  employ  legal  counsel  them- 
selves and  are  creating  business  for  lawyers.  The  amount  of  competition 
between  the  two,  both  present  and  prospective,  has  been  greatly  over- 
estimated in  some  quarters.  The  purely  legal  business  taken  over  has 
simply  been  transferred  from  attornej^s  not  connected  with  the  company 
to  attorneys  in  the  employ  of  the  companj^;  while  much  of  the  business 
in  question  is  technical  and  clerical  rather  than  legal,  and  involves  work 
which  the  lawyer  who  devotes  himself  to  the  practice  of  his  profession 
is  often  glad  to  be  rid  of.  Arrangements  are  often  made  that  the  trust 
company  administering  an  estate  shall  retain  the  services  of  the  lawyer 
chosen  by  the  family  interested  in  the  estate;  and  it  is  customary  Avhen  a 
lawyer  brings  business  to  a  trust  company  for  the  latter  to  employ  him 
as  attorney  in  any  matter  connected  with  such  business  which  may  re- 
quire special  legal  services. 

New  companies  will  do  well  to  be  patient  about  the  growth  of  the 
trust  department,  remembering  that  its  progress  is  naturally  slow,  and 
that  its  business  is  cumulative,  like  that  of  the  lawj^er  or  the  doctor, — 
the  greater  the  amount  of  work  successfully  done  the  easier  it  will  be 
to  obtain  new  business.  It  is  a  matter  of  building  up  a  reputation, — at 
process  which   requires  time. 

Preparation  of  Advertising  Copy. 

The  preparation  of  copy  for  the  various  advertisements  requires  a 
peculiar  skill.  Natural  qualifications  for  such  work  are  required  as  a 
basis,  and  must  be  supplemented  by  careful  study  of  the  principles  of 
advertising  and  of  the  work  of  the  best  advertising  writers.  The  work 
can  not  be  done  by  following  fixed  rules,  but  some  conclusions  drawn 
from  the  practical  experience  of  advertising  men  afford  useful  guides. 

The  copy  should  be  adapted  to  the  medium  used.  Different  kinds  of 
copy  are  required  for  newspaper,  magazine,  circular  and  street  car  adver- 
tisements. The  newspaper  advertisement  will  be  read  by  busy  people 
and  will  usually  be  seen  but  once,  the  life  of  the  newspaper  being  not 
over  twenty-four  hours.  All  that  can  be  given  is  a  single  impression, 
which  should  be  as  strong  as  possible.  The  reader  must  get  the  impres- 
sion quickly  and  easily,  if  at  all.  The  magazine  advertisement  will  be 
read  by  people  having  more  leisure,  and  may  partake  more  of  the  "reason- 
why"  style.  In  the  circular  or  booklet  still  more  detail  may  be  given.  A 
card  in  a  street  car  offers  space  for  a  very  few  words,  a  single  impression ; 
but  it  may  be  read  a  number  of  times  by  the  same  persons. 

The  copy  should  be  adapted  to  the  space  used.  It  should  never  crowd 
the  space. 


MKTHOOS  OF   l.\(  HKASING  BUSINESS.  393 

The  copy  should  be  adapted  to  the  reader.  It  must  be  couched  in 
words  and  terms  that  he  understands.  If  addressed  to  the  busy  man,  it 
must  be  brief;  he  will  not  read  long  explanatory  matter.  But  others 
may  want  to  read  reasons  and  arguments,  and  too  great  brevity  is  a 
mistake  in  advertisements  addressed  to  such  persons.  Advertisements 
addressed  to  the  general  reader  must  not  be  so  long  as  to  repel  the  busy 
reader,  nor  so  brief  as  to  be  hard  to  understand.  Perhaps  the  weakest 
point  of  the  average  writer  of  financial  advertisements  is  a  failure  to 
understand  the  viewpoint  of  the  general  reader  and  to  learn  his  wants 
and  his  attitude.  The  average  man  does  not  understand  the  banking  or 
trust  company  business ;  it  is  a  mystery  to  him — simple  as  it  may  seem 
to  an  insider.  lie  would  be  greatly  interested  in  a  magazine  or  Sunday 
newspaper  article  explaining  the  details  of  the  business  ii.  a  frank  and 
straightforward  manner — written  in  plain  English  and  not  in  clearing- 
house phraseology.  He  would  appreciate  a  booklet  from  his  trust  com- 
pany giving  such  information. 

The  wording  of  the  advertisement  should  have  the  ring  of  sincerity, 
honesty,  frankness;  and  it  must  be  backed  up  by  performance. 

The  literary  style  used  in  the  copy  must  be  interesting,  catchy;  but 
never  witty,  frivolous  or  over-original.  Parting  with  his  money  or  dele- 
gating his  business  never  impresses  a  man  as  a  humorous  procedure;  the 
"cute"  financial  advertiser  disgusts  him.  The  sentences  should  be  short, 
crisp,  clear;  the  words  good,  common  short  English  words,  avoiding 
superlatives  and  technical  terms.  The  test  of  a  good  advertisement  is 
that  it  attracts  attention,  interests  and  convinces.  It  must  leave  the 
reader  in  a  pleasant  frame  of  mind — never  scold,  preach  or  antagonize. 

A  fundamental  principle  in  copy-writing  is  to  treat  one  point  at  a 
time.  If  the  reader  digests  that  one  point,  the  advertisement  has  been 
a  marked  success.     The  next  advertisement  may  add  another  point. 

The  copy  should  be  addressed  to  just  one  person — the  reader.  He 
should  be  made  to  feel  that  his  busine'ss  is  wanted. 

The  copy  for  advertisements  in  periodicals  should  be  changed  fre- 
quently; in  the  newspapers,  daily.  This  holds  the  interest  of  readers  and 
creates   the   impression   that  the  company   is  alive. 

Timeliness  is  a  telling  point.  Bank-books  for  Christmas  presents 
should  not  be  advertised  in  July.  A  robbery  offers  a  splendid  oppor- 
tunity for  an  advertisement  on  the  folly  and  danger  of  keeping  large 
sums  of  money  in  the  house  or  on  the  person;  a  fire,  for  a  discussion  of 
the  advantages  offered  by  the  safe  deposit  department;  a  defalcation 
by  an  executor,  for  a  demonstration  of  the  usefulness  of  the  trust  com- 
pany in  fiduciary  capacities.  A  few  live  companies  produced  some  telling 
advertisements  for  their  safe  deposit  departments  immediately  after  the 
San  Francisco  disaster. 

Of  the  inducements  or  talking  points  available  for  trust  comji.iny 
advertisements,  the  strongest  is  undoubtedly  that  of  the  solidity  of  the 
company  and  the  security  afforded  to  depositors.  No  inducements  will 
attract  people  to  an  institution  which  they  do  not  believe  to  be  saft. 
Facts    tending    to    show    solidity    are    ample    capital    and    surplus,    large 


S9i  TRUST  COMPANIES. 

assets,  proportion  of  assets  to  liabilities  other  than  capital  and  surplus, 
careful  investments,  reserve,  well-known  and  substantial  directors,  trusts 
from  courts,  state  or  municii^al  deposits,  state  sujjervisioii,  an  up-to-date 
system  of  accounting,  the  confidence  of  numerous  depositors.  Frequent 
and  thorough  audits,  cither  by  a  regular  auditing  department  or  by  out 
side  audit  concerns  provide  an  excellent  talking  point  for  solidity. 

Next  to  safety,  ability  and  desire  to  give  capable  service  is  usually 
the  best  talking  point.  A  high  rate  of  interest  is,  as  a  rule,  not  a  good 
advertising  point.  There  is  apt  to  be  a  suspicion  that  the  high  rate  of 
interest  is  paid  at  the  sacrifice  of  security.  Nevertheless,  there  are  excep- 
tions to  the  rule.  In  banking-by-mail  business,  Pittsburg  and  Cleveland 
banks  have  secured  large  deposits  partly  because  of  their  four  per  cent. 
Interest  rates  on  savings  accounts.  Where  the  interest  rate  is  used  as 
an  inducement,  it  is  of  prime  importance  to  show  why  it  is  possible  to  pay 
such  rates  without  sacrifice  of  safety. 

Among  other  inducements  which  may  be  made  the  subjects  of  adver- 
tisements, are  convenience  of  location,  attractive  building  or  offices,  special 
conveniences  for  customers,  especially  for  ladies,  advice  about  business 
matters,  opening  of  the  office  one  evening  a  week.  A  series  of  strong 
advertisements  may  be  written  on  the  different  functions  of  the  com- 
pany, treating  one  at  a  time.  The  maxims  of  Benjamin  Franklin  and 
others,  with  brief  comments,  provide  good  material  for  educational  pub- 
licity. 

The   Typographical   Make-up   of   the   Advertisement. 

The  typographical  make-up  of  the  advertisement  should  be  made  the 
subject  of  careful  study,  for  it  largely  determines  whether  the  reader 
will  notice  the  advertisement  at  all.  It  must  be  different  from  the  sur- 
rounding matter — set  off  by  itself.  On  the  average  page,  this  may  be 
accomplished  by  means  of  a  suitable  border  and  a  white  space  between 
the  border  and  copy.  If  the  page  is  pretty  well  filled  with  bordered 
advertisements,  however,  more  individuality  and  distinctiveness  will  be 
obtained  without  the  border.  As  a  rule,  there  should  be  a  caption  or- 
catch-line  which  stands  out  distinctly,  to  appeal  to  interest  or  curiosity. 
The  face  and  size  of  type  for  use  in  the  caption  and  in  the  body  matter, 
as  well  as  the  border  and  general  make-up,  should  be  dictated  by  the 
advertiser,  and  the  proof  should  be  seen  and  corrected.  It  is  wise  to 
allow  the  printer  ample  time.  The  advertisement  should  have  a  good 
position  on  a  page  apt  to  be  read  by  the  people  whom  it  is  desired  to 
reach.  It  should  be  given  plenty  of  room;  if  the  copy  crowds  the  space, 
the  latter  should  be  increased  or  the  copy  be  rewritten.  It  is  economy  to 
pay  for  enough  blank  space  to  give  a  good  setting. 

There  is  an  advantage  in  always  using  a  distinctive  style  of  type  or 
border  or  an  emblem — something  which  will  readily  give  individuality  to 
all  of  the  companj'^'s  announcements.  To  insure  getting  just  the  make-up 
that  is  desired  many  companies  use  electrotypes  which  they  own  and  dis- 
tribute to  the  papers  as  needed.  The  cost  is  slight  and  no  chances  are 
taken  of  jooor  judgment  or  serious  errors. 


CHAPTER  Ml  . 

EXAMINATIONS,    AUDITS    AND    OTHER    MEANS    OF    SAFE- 
GUARDING THE  BUSINESS. 

F()RTr.\A'l'j:i,Y,  thf  UikKikv  of  tla  day  is  toward  the  surround- 
ing of  the  trust  company  business  with  every  reasonable  safe- 
guard. Tins  tendency  is  due  not  only  to  the  increasing  public 
demand  for  such  safeguards,  but  also  to  a  truer  appreciation  on  the 
part  of  directors  and  officers  of  the  sacredness  of  their  trust,  and  to 
the  realization  that  it  is  good  business  policy  to  use  every  means  of 
inspiring  confidence  in  institutions  whose  success  is  built  upon  confidence 
as  a  corner-stone.  For  the  safeguarding  of  the  business  of  trust  compa- 
nies every  argument  applies  that  has  force  in  the  case  of  banks,  and  addi- 
tional arguments  are  found  in  the  wider  scope  of  the  business  and  in 
the  increasingly  important  trusts  that  are  committed  to  their  care. 

The  parties  interested  in  the  matter  include  the  general  piU)lic.  the 
stockholders,  and  the  emi)loyees.  Of  the  general  public,  the  depositor"? 
and  the  beneficiaries  of  the  trusts  are  of  course  most  directly  interested; 
but  innsnuieh  as  trust  companies  constitute  an  important  part  of  our 
financial  system,  and  because  the  failure  of  such  a  company  vitally 
aflVets  the  interests  of  many  persons  who  have  had  no  direct  d<alings 
with  it.  all  the  peojile  have  a  right  to  demand  that  in  the  conduet  of  the 
business  reasonable  precautions  be  adopted.  The  stockholders  have 
their  money  invested  in  the  eomjiany  and  are  the  first  to  sutler  in  case  of 
failure;  they  have  valid  reasons  for  requiring  satisfactory  protection 
of  their  interests.  The  emjiloyees,  including  the  officers,  are  entitled  to 
every  possible  jjrotection  against  excessive  temptation. 

Aside  from  the  n-strictions  and  limitations  upon  the  business  imposed 
by  the  laws  under  which  trust  companies  operate,  the  possible  safe- 
guards include  examinations,  audits,  care  in  the  selection  of  officers  and 
other  employees,  and  the  adoption  of  an  accounting  and  administrative 
system  which  leaves  the  fewest  possible  loopholes  for  dishonesty  or 
bungling  management. 

AtCOl  .\TING    AND    AoMIXISTRATIOX. 

Of  th(se  a  Mell-considered  and  carefully  planned  system  of  account- 
ing and  of  administration  is  fundamental.  Recent  years  have  seen  great 
progress  in  this  respect,  but  there  is  room  for  much  more.  Many  coii>- 
panies  are  still  using  systems  which  invite  error,  mismanagement  and 
fraud:  and  doubtless  some  will  continue  to  use  them  until  failure  comes 
or  until  a  competent  accountant  or  auditor  is  employed  who  shall  point 
out  tilt"  weak  places,  .\mong  recent  ca.ses  of  banks  and  trust  companies 
niiiifil  bv  defalcations  have  been  several   in  which  stcalinffs  of  hundreds 


396  TRUST   COMPANIES. 

of  thousands  of  dollars  had  been  going  on  for  a  series  of  years !  A 
small  trust  company  was  robbed  of  several  thousand  dollars  by  an 
emploj-^ee  who  had  for  some  time  acted  both  as  savings  teller  and  as- 
savings  bookkeeper !  In  such  cases  one  hardly  knows  whom  to  blame 
most,  the  defaulting  employee  or  the  officials  responsible  for  the  lack  of 
intelligent  system.  It  is  true  that  no  system  can  be  devised  which  will 
absolutely  prevent  blunders  on  the  part  of  careless  or  incompetent  work- 
ers, or  stealings  on  the  part  of  dishonest  ones;  but  it  is  entirely  practi- 
cable to  perfect  systems  which  will  reduce  such  possibilities  to  a  minimum. 

Such  a  SA'stem  having  been  adopted  and  put  into  operation,  the  next 
essential  is  to  see  that  it  is  carried  out  faithfully,  and  that  nothing  that 
smacks  of  habitual  carelessness,  mismanagement  or  dishonesty  exists- 
This  can  be  accomplished  only  by  means  of  examinations  and  audits, 
regarding  which  a  considerable  change  of  sentiment  has  taken  place  dur- 
ing recent  years.  The  old-time  banker  looked  upon  it  as  something  of 
an  insult  to  suggest  that  his  work  ought  to  be  checked  over  or  examined, 
feeling  that  the  dignity  of  his  trust  ought  to  place  him  above  suspicion. 
The  modern  view  is  such  that  the  most  progressive  bank  and  trust  com- 
pany officials  welcome  thorough  and  intelligent  audits,  believing  that 
the  careful  and  conscientious  man  has  nothing  to  lose  and  much  to  gain 
by  having  the  fidelity  of  his  administration  proved  beyond  question.  It 
is  a  frequent  practice  to  voluntarily  employ  public  accountants  to  make, 
thorough  audits. 

So  far  as  the  audit  is  designed  to  detect  crime,  it  is  not  a  reflection* 
upon  the  honesty  of  the  average  officer  or  clerk — which  is,  indeed,  as- 
sumed— but  rather  a  recognition  of  the  fact  that  occasionally  a  dis- 
honest man  may  creep  in  and  destroy  the  work  of  the  honest  majority* 
and  from  this  viewpoint  the  audit  is  a  protection  to  the  faithful  ones. 
At  any  rate,  the  public  is  no  longer  disposed  to  accept  from  the  directors 
of  financial  institutions  which  fail  the  excuse  that  "they  didn't  know- 
there  was  anything  wrong,  and  supposed  the  officers  and  clerks  were 
honest,"  and  is  coming  more  and  more  to  hold  such  directors  both  mor- 
ally and  legally  responsible  for  such  knowledge.  The  public  is  right 
about  it,  too;  there  is  no  excuse  for  slipshod  methods  and  guesswork  in 
the  business  of  the  trust  company,  and  men  who  are  not  willing  to  attend' 
to  their  business  have  no  place  upon  the  board  of  directors  of  such  a 
corporation. 

It  is  to  be  observed  further  that  the  detection  of  crime  is  by  no  means 
the  only  object  of  examination  and  audit.  Still  more  important  is  the 
prevention  of  crime,  which  systematic  auditing  accomplishes  in  two 
ways — by  the  discovery  of  stealing  at  its  beginning,  when  the  amount 
is  almost  invariably  small,  and  by  the  deterrent  effect  which  is  inevitable 
when  officers  and  employees  understand  that  speedy  detection  is  practi- 
cally certain  if  anything  wrong  is  attempted.  Indeed,  the  very  sugges- 
tion of  stealing  comes  to  most  men  only  when  the  conditions  seem  to 
make  it  easy  and  comparatively  safe.  Another  exceedingly  important 
purpose  of  a  proper  audit  lies  in  criticism  and  suggestion  regarding  the 


EXAMINATIONS,  AL'DITS,   ETC.  397 

system  of  .•iccountiiifj  and  gtiural  administration,  the  pointing  out  of  loop- 
holes for  error  or  dishonesty  and  the  enforcinfj  of  faithful  adlierence  to 
the  system  in  use. 

Examinations  by  officials  representing  the  state  government  are 
required  in  many  states,  and  ought  to  be  in  all.  State  laws  sometimes 
require  also  examinations  by  committees  of  the  boards  of  directors;  and 
M-hether  requin  d  by  the  state  or  not,  such  examinations  are  usually  pro- 
vided for  in  the  by-laws  of  trust  comjianies.  Examinations  are  also 
made  in  some  companies  by  committees  of  stockholders  who  are  not  mem- 
bers of  the  board  of  directors,  while  a  few  companies  have  resorted  to 
examinations  of  each  department  by  employees  of  other  departments. 
Among  the  larger  companies  the  habit  is  growing  of  maintaining  a 
special  auditing  dejjartment;  while  instead  of  this,  or  in  addition  to 
it,  many  conqianies  have  an  annual  or  semi-annual  audit  by  a  j)ublic 
auditing  concern. 

The  examinations  conducted  under  the  authority  of  the  state  are 
intended  primarily  to  see  that  the  company  is  conducting  its  business 
in  accordance  with  the  laws  of  the  state;  and  while  their  purpose  is 
attained  more  or  less  com])letely,  according  to  the  thoroughness  of  the 
officials  who  do  the  work  and  the  time  at  their  disposal,  such  examina- 
tions are  rarely  thorough  enough  to  detect  any  but  the  most  bungling 
attempts  at  stealing,  while  suggestions  regarding  the  system  of  account- 
ing are  wholly  without  their  province. 

Examinations  by  committees  of  directors  arc  as  a  rule  very  super- 
ficial and  unsatisfactory,  while  many  are  mere  farces.  In  the  cases 
of  "one-man  companies" — that  is,  companies  in  which  the  executive 
officer  is  relied  ujjon  to  manage  the  company  practically  alone,  without 
advice  or  investigation  by  the  directors,  these  examinations  are  apt  to 
be  exceptionally  farcical;  and  this  in  spite  of  the  fact  that  these  are  the 
companies  which  specially  need  thorough  and  frequent  examination. 
The  reasons  for  the  incompleteness  of  directors'  examinations  are  found 
partly  in  tlie  common  disposition  to  regard  the  director's  office  as  a  badge 
of  honor  rather  than  as  an  avenue  of  service,  and  partly  in  the  fact 
that  the  men  chosen  for  such  })ositions  are  usually  men  whose  time  is 
very  fully  occuiiied  with  their  own  affairs  and  who  often  are  urged  to 
accejit  the  position  against  their  wills  and  better  judgment.  Nor  art 
the  men  composing  these  committees  as  a  rule  familiar  with  the  details  or 
even  the  principles  of  trust  company  accounting.  The  time  given  to  the 
•examination  by  such  committees  does  not  average  over  a  day  or  a  half 
■day.  It  is  evident  that  such  examinations  can  hardly  be  deemed  satis- 
factory as  evidences  of  the  sound  condition  of  the  conqjany. 

Nevertheless,  the  writer  does  not  want  to  be  luiderstood  as  holding 
the  opinion  that  the  ordinary  examination  by  a  committee  of  directors  is 
wholly  useless.  Failures  often  occur  l>ecause  of  unsound  or  excessive 
loans  or  investments,  and  if  the  directors  are  not  already  aware  of  such 
•conditions   in   their  company — as  they   should    1h" — even   a   cursory  exam- 


398  TRUST   COMPANIES. 

ination  may  open  their  eyes,  unless  there  is  intentional  dishonesty  and 
concealment  on  the  part  of  the  officers.  If  the  committee  insists  upon 
actually  seeing  and  handling  all  securities  and  the  notes  for  all  loans,, 
it  will  at  least  have  proved  that  the  assets  called  for  by  the  books  are 
in  the  company's  possession  at  the  moment;  while  it  will  also  have  an 
opportunity  to  observe  what  names  of  officers  or  directors  appear  as 
makers  or  indorsers  on  the  notes.  This  is  of  some  value,  though  of 
course  it  gives  no  assurance  that  the  books  are  correct,  nor  would  it 
detect  anything  that  would  even  create  suspicion  against  an  ordinarily 
shrewd  officer  who  was  engaged  in  looting  the  institution.  There  is  alsa 
some  advantage  in  the  insight  into  the  company's  affairs  which  the  com- 
mittee may  gain,  and  in  the  interest  which  may  be  awakened  in  them. 

But  a  directors'  committee  examination  may  easily  be  made,  and 
sometimes  is  made,  of  considerable  value,  if  men  are  selected  who  are 
willing  to  give  several  days  to  the  task  and  who  have  some  technical 
knowledge  which  qualifies  them  for  the  work.  The  committee  may  then 
make  some  general  examination  of  the  books,  examine  and  list  all  of 
the  assets  called  for,  with  their  appraisal  of  same,  make  note  of  items 
that  are  worthless  or  unmarketable  or  of  uncertain  value,  point  out 
serious  flaws  and  tabulate  loans  and  investments  in  which  officers  or 
directors  are  interested,  giving  names  and  amounts  for  each.  Such  a 
committee  should  not  include  any  members  of  the  executive  committee 
or  any  of  the  officers,  and  should  work  independently  of  the  latter. 

An  examination  by  a  committee  of  stockholders  who  are  not  direc- 
tors may  accomplish  much  good,  provided,  as  in  the  case  of  the  directors' 
committee,  men  of  ability  who  will  take  the  necessary  time  are  found. 
Its  work  may  well  proceed  along  the  lines  just  indicated,  going  further 
if  possible.  Such  an  examination  has  an  advantage  in  that  it  is  con- 
ducted by  men  who  are  not  directly  responsible  for  the  policy  that  has 
been  pursued. 

Examinations  by  committees  of  employees  are  practicable  only  in 
companies  having  several  departments.  They  may  be  made  of  some 
value  as  examinations  and  of  much  value  in  the  way  of  education  and 
increased  interest  among  the  men  who  do  the  work;  but  are  evidently 
subject  to  the  important  objection  that  they  are  not  apt  to  affect  the 
work  of  officers;  while,  as  the  work  must  be  done  "out  of  hours,"  they 
impose  a  burden  upon  the  men  which  is  hardly  justifiable. 

That  the  insufficiency  of  the  different  kinds  of  examinations  just 
named  is  coming  to  be  widely  recognized  is  shown  by  the  steadily  increas- 
ing number  of  companies  which  either  maintain  a  special  auditing 
department  or  employ  outside  auditors  or  auditing  companies  to  make 
thorough  examinations  of  their  work,  some  companies  having  even  adopt- 
ed both  plans.  It  is  only  by  such  means  that  anything  like  a  satisfactory 
examination  can  be  made,  particularly  of  the  larger  institutions.  The 
wonder  is  that  the  fact  has  been  so  long  unrecognized,  and  that  other 
corporations  have  preceded  banks  and  trust  companies  in  the  adoption 
of  thorough  auditing  systems. 


EXAMINATIONS,  AUDITS,  ETC.  399 

As  between  the  niaiiiteiiaiice  of  an  auditing  dei)artment  and  the 
employing  of  an  outside  audit  company  for  the  examination  of  the 
larger  trust  companies,  not  enough  experience  has  been  gained  to  deter- 
mine which  is  the  better  plan,  and  opinions  naturally  differ.  If,  as 
some  large  companies  have  found  to  be  the  case,  under  either  plan  it 
is  necessary  to  have  a  permanent  force  engaged  in  auditing  thrQughout 
the  year,  the  choice  is  largely  one  of  form,  except  perhaps  as  to  cost. 
Of  course,  the  smaller  companies  do  not  oiler  work  enough  for  a  per- 
manent auditor,  unless  he  puts  in  some  of  his  time  at  other  duties,  in 
which  case  his  value  as  an  auditor  is  slight.  Such  companies  should 
employ  a  competent  and  responsible  accountant  to  put  in  such  time  as 
is  necessary  for  the  woi'k.  He  should  make  complete  audits  at  intervals 
of  six  months  or  a  year,  and  in  addition  step  in  without  previous  notice 
to  make  special  examinations.  His  reports  should  be  rendered  to  the 
board  of  directors  in  person,  and  never  to  an  officer  of  the  company; 
and  the  stockholders  are  entitled  to  an  annual  report  giving  at  least  his 
general  conclusions. 

Whether  an  employee  of  an  audit  company  or  of  the  audit  depart- 
ment of  the  trust  company,  the  auditor  in  charge  should  be  a  man  who 
thoroughly  understands  both  the  science  of  accounting  and  the  busi- 
ness of  the  trust  company.  He  must  possess  courage  and  force  of  char- 
acter, be  not  over-trusting  or  over-suspicious,  and  be  endowed  with  more 
than  the  average  amount  of  tact.  If  he  has  assistants,  as  he  must  in 
examining  the  larger  companies,  they  should  also  be  selected  with  a 
view  to  their  fitness  for  this  particular  work. 

TiiK  AfiuT  Department. 

In  1903  a  committee  appointed  by  the  Trust  Company  Section  of  the 
American  Bankers'  Association  reported  to  that  body,  that  while  excel- 
lent systems  of  auditing  were  in  use,  there  were  but  few  companies  which 
had  established  regular  audit  departments.  Since  that  time  the  organiza- 
tion of  such  departments  has  been  quite  rapid,  but  as  is  natural  in  a 
new  department,  there  is  little  uniformity  in  its  conduct  among  different 
companies.  In  some  cases  a  department  is  organized  with  an  auditor  and 
a  innubcr  of  assistants;  in  others,  there  is  a  single  official  known  as  the 
auditor,  or  the  controller,  who  in  addition  to  the  duties  of  auditor  acts 
as  chief  of  the  clerical  force  or  performs  other  duties.  In  such  cases 
his  work  is  usually  supplemented  by  the  periodical  employment  of 
an  audit  company. 

In  the  selection  of  an  auditor  favoritism  should  have  no  place.  He 
should  be  appointed,  not  by  an  officer,  but  by  the  board  of  directors, 
and  to  them  and  them  only,  in  regular  session,  should  he  make  his 
reports.  His  work  is  quite  as  much  a  check  upon  the  officers  as  upon 
the  clerks,  and  for  that  reason  it  is  manifest  that  he  should  not  be  in 
any  way  dependent  u])on  the  officers.  For  a  similar  reason  his  appoint- 
ment should  not  be  dictated  by  the  executive  committee  alone,  but  by  the 
full  board  of  directors,  and  he  should  report  also  to  the  stockholders. 


400  TRUST   COMPANIES. 

As  already  indicated,  an  important  part  of  the  duty  of  the  auditor 
is  to  devise  or  to  perfect  the  system  of  the  institution  with  the  special 
purpose  of  guarding  against  carelessness  or  dishonesty.  He  will,  for 
example,  see  that  the  officers  or  tellers  who  are  authorized  to  sign  or 
countersign  drafts  do  not  have  also  the  right  to  make  entries  in  the 
books;  that  the  same  employee  does  not  both  handle  cash  or  securities 
and  keejD  the  books;  that  where  there  is  opportimity  of  collusion  between 
tellers  and  bookkeepers,  the  latter  are  frequently  shifted  to  other  sets 
of  books  without  previous  notice;  that  the  work  is  so  subdivided  that 
no  one  man  can  carry  through  all  the  details  of  any  transaction. 

The  exact  methods  followed  in  the  work  of  auditing  must  depend 
upon  the  conditions  existing  in  each  institution,  and  it  is  impossible  to 
devise  a  system  which  will  be  applicable  to  all  companies.  An  attempt 
to  do  this  was  made  by  a  committee  appointed  by  the  Trust  Companj' 
Section  of  the  American  Bankers'  Association,  which  reported  in  1903; 
but  the  committee  reached  the  conclusion  that  a  system  applicable  to 
all  trust  companies  was  out  of  the  question.  The  report  of  the  com- 
mittee, however,  and  the  three  papers  on  the  .subject  contributed  by 
prominent  trust  company  auditors,  contain  many  valuable  and  practical 
suggestions."" 

The  Selection  and  Treatment  of  Employees. 

The  success  of  many  men  prominent  in  the  business  world  has  been 
ascribed  to  their  sagacity  in  the  selection  of  the  men  who  worked  for 
and  with  them.  The  success  of  a  trust  company  is  often  materially 
affected  by  the  kind  of  judgment  used  in  the  selection  and  training  of 
its  employees  as  well  as  of  its  officers.  The  company  whose  entire  work- 
ing force,  from  officers  down  to  errand  boys,  is  uniformly  courteous, 
obliging,  accurate  and  capable,  has  a  tremendous  advantage  over  a  com- 
pany whose  officers  have  these  qualities,  but  some  of  whose  employees 
are  impolite,  unaccommodating  or  prone  to  numerous  errors. 

It  is  not  always  an  easy  matter,  particularly  in  the  larger  companies 
where  changes  of  employees  are  frequent  and  must  often  be  made  in 
a  hurry,  to  find  just  the  right  person  when  a  vacancy  occurs.  For  this 
reason,  if  for  no  other,  the  officer  in  charge  of  the  employment  of  the 
clerical  force  will  do  wisely  to  look  up  available  timber  before  the 
moment  it  is  needed,  and  always  have  on  file  information  regarding  a 
number  of  applicants  whose  record  he  has  taken  pains  to  learn.  Most 
companies  have  more  applications  for  positions  than  they  have  places 
to  fill.  Unless  something  appears  at  once  that  shows  the  applicant  to 
be  undesirable,  he  (or  she)  should  be  requested  to  write  a  letter  of 
application  stating  his  age,  education,  experience,  present  occupation, 
reason  for  proposed  change,  references,  etc.  It  has  been  found  useful 
to  file  such  applications,  together  with  other  letters  or  memoranda  relat- 
ing to  the  applicant,  in  a  specially  printed  envelope,  represented  in  Figure 
iJ86.   These  envelopes  may  be  filed  alphabetically  or  grouped  according  to 


75  See   Proceedings    Trust   Company    Section    American    Bankers'    Association, 
1903.    pp.    12-25. 


EXAMINATIONS,  AL'DITS.  ETC.  un 

APPLICATION 


37^     "^hct.  /lyi^v^  nS^. 


RECOMMENDED  RV      -^^    AJaA^^#\aA><U     ^ML^^<>^    £ynnjyCa<^ 


PERSONAL  APPEARANCE. 


^?(i^.ce 


FAMILY 

PARENT 
BUSINESS 


^^i^AjAc^iLzkaJo<JiJ 


PREVIOUS  EMPLOYMENT  OF  APPLICANT 


1.    VA/iTM  (   '^^^<-<^-<^C■     ^7>\X^    ) 


CLASS   OF  WORK. 

UNDER  WHOM 

<2)    WITH  


CLASS  OF  WORK. 


REASON    FOR    LEAVING- 
<3)    WITH  


CLASS  OF  WORK . — PER  MO.  $ 

REASON    FOR    LEAVING ■ — 


REMARKS 


l-"iG.   2S6. — .Vppi.ic.vtios   Exvei.opi:. 


402  TRUST   COMPANIES. 

positions  for  which  the  applicants  are  qualified.  The  officer  notes  upon 
the  envelope  the  personal  apearance  of  the  applicant^  and  adds  further 
data  obtained  by  correspondence  with  references  given;  so  that  after  a 
personal  interview  he  is  usually  able  to  form  a  pretty  definite  idea  as 
to  whether  the  candidate  is  worth  placing  in  the  eligible  list.  If  the 
system  is  faithfully  followed^  there  will  usually  be  on  hand  applications 
from  pfersons  about  whom  the  officer  in  charge  has  some  knowledge,  and 
who  will  be  available  when  a  vacancy  occurs. 

Of  the  qualifications  required  in  an  applicant  who  is  to  be  considered 
favorably,  honesty  is  the  fundamental  thing.  The  writer  is  aware  that 
the  remark  is  trite,  but  believes  that  there  is  as  much  appropriateness  in 
the  remark  now  as  there  ever  was.  The  restless  and  hurry-to-get-rich 
disposition  of  the  average  American  of  to-day  can  not  be  seasoned  too 
much  with  the  good,  old-fashioned  virtue  of  absolute  integrity;  and  cer- 
tainly the  premium  on  that  virtue"  should  nowhere  be  greater  than  in  the 
trust  company.  Next  to  honesty  and  general  good  character,  education 
is  important.  Boys  who  have  not  finished  the  grammar  school  are  con- 
tinually applying  for  positions.  Girls  who  have  taken  courses  in  stenog- 
raphy before  they  have  learned  to  spell  or  to  begin  a  sentence  with  a 
capital  letter,  want  to  become  bank  stenographers.  Due  consideration 
should  be  given  to  cases  in  which  circumstances  make  it  impossible  for 
the  apiolicant  to  continue  at  school;  but  as  a  rule  the  welfare  of  the 
applicant  and  of  the  company  alike  demand  that  boys  and  girls  who 
have  not  had  at  least  a  high  school  education  be  discouraged  from  seek- 
ing permanent  positions  with  trust  companies.  Particularly  is  this  the 
case  in  companies  whose  aim  is  to  develop  men  for  its  higher  clerical  or 
official  positions  from  the  ranks.  In  common  with  the  business  of  the 
banks,  the  business  of  the  trust  company  is  in  a  state  of  evolution. 
Civilization  is  growing  more  complex,  and  the  United  States  has  taken 
its  place  among  the  "first  powers"  of  the  world,  and  the  business  of  the 
trust  company  is  coming  to  require  more  highly  trained  minds  and  a 
broader  outlook.  Undoubtedly  the  best  material  for  trust  company  work, 
other  things  being  equal,  is  found  in  the  man  with  college  training,  pro 
vided,  of  course,  he  has  used  his  opportunities  and  not  merely  "been  to 
college."  His  mind  is  better  trained,  his  outlook  is  broader,  he  puts 
more  intelligence  into  his  work,  and  he  does  not  so  soon  reach  the  limit 
of  his  capacity. 

The  qualities  which  go  to  make  up  an  attractive  personality  are  next 
in  importance — neatness  in  person  and  in  dress,  a  cheerful  disposition, 
and  a  courteous  and  friendly  manner.  Ordinary  ability  and  willingness 
to  work  arc  of  course  assumed.  If  the  position  to  be  filled  is  advanced, 
previous  technical  experience  is  of  course  necessary;  but  in  ordinary 
cases  the  man  with  the  qualifications  just  named  will  pick  up  the  tech- 
nical knowledge  and  in  a  few  months  be  of  more  value  to  the  company 
than  the  experienced  man  who  has  not  these  qualifications. 

In  the  matter  of  promotions  civil  service  rules  should  be,  and  hap- 
pily  in   most  companies   are,   in   force.      "Influence"   is   coming  to   have 


EXA>nNATl<)NS.  Al'DlTS.   FTC.  U):i 

less  and  less  powir  in  the  matter,  and  should  have  none.  The  rilling  of 
vacancies  in  the  higher  positions  by  promotion  from  the  ranks  wlien 
possible  is  demanded  alike  by  justice  to  the  employee  and  by  the  best 
interests  of  the  company,  for  no  one  thing  so  tends  to  maintain  a  loyal 
spirit  among  the  employees  as  the  knowledge  that  a  "square  deal"  in 
this  matter  is  assured.  This  does  not  mean  that  every  employee  should 
be  "moved  up  one  peg"  every  time  a  vacancy  occurs  in  one  of  the  jjigher 
clerkships;  nor  does  it  demand  that  length  of  service  sliould  be  a  prime 
cousidrration.  It  means  that  the  man  who  has  shown  his  capacity  and 
proved  his  merit  in  the  service  of  the  company  should  be  given  the  pref- 
erence over  an  outsider  if  he  is  competent  to  rill  the  position  which  is 
vacant.  It  will  of  course  occasionally  happen  tl)at  no  one  of  the  em- 
ployees is  capable  of  rilling  the  position;  then  and  only  then  should  an 
outsider  be  brought   in. 

P'air  and  liberal  treatment  of  employees  in  other  matters  is'  dictated 
not  only  by  the  prineiphs  of  justice  but  by  wise  policy  as  well.  Salaries 
should  be  reasonably  liberal,  and  in  their  adjustment  the  ability  re- 
quired, the  responsibility  assumed  and  the  length  of  individual  service 
should  be  among  the  matters  considered.  Vacations  should  be  given  to 
all  en)j)loyees  each  year  as  a  matter  of  course.  They  should  be  arranged 
according  to  a  derinite  plan  and  not  be  put  off  until  asked  for,  and 
should  be  announced  long  enough  in  advance  to  enable  each  one  to 
make  his  plans.  The  best-managed  companies  not  only  permit  but  re- 
quire every  euiployee  to  take  a  vacation  each  year,  not  only  because  the 
vacation  will  enable  the  emjdoyee  to  do  better  work,  but  because  it  gives 
o})portunity  to  judge  better  the  accuracy,  faithfulness  and  integrity 
shown  in  his  work.  The  average  length  of  vacation  for  employees  below 
official  rank  is  about  two  weeks.  In  order  to  care  for  the  work  during 
vacations  and  during  sickn«ss  and  unavoidable  absences  for  other  reasons, 
one  or  more  general  clerks  who  are  able  to  step  in  and  rill  any  position 
should  be  employed. 

In  spite  of  a  well-derined  prtjudiee  against  them  on  the  jiart  of 
many  officials,  women  have  made  their  way  into  the  ranks  of  trust  com- 
pany workers  and  are  rilling  a  variety  of  different  positions,  and  in 
many  cases  filling  them  with  exceptional  merit.  They  are  most  fre- 
quently found  in  the  position  of  stenographer,  but  there  are  many 
women  who  are  eajiably  rilling  the  positions  of  bookkeeper,  teller, 
clerk,  etc. 

.\I1  employees  having  any  degree  of  responsibility — and  this  includes 
nearly  all,  if  not  quite  all — should  be  bonded  in  reasonable  amounts.  Ex- 
cejit  {)erhaps  in  the  smallest  towns,  the  practice  is  quite  universal  to  use 
bonds  of  surety  coni]>anies.  the  jiremiums  for  which  are  paid  by  the 
emj)loying  comjiany. 

Every  reasonable  opj>ortunity  should  be  given  to  employees  to  learn 
the  business  in  other  departments  than  the  one  in  which  their  own  work 
lies.  Occasional  sliifting  of  positions  is  a  help  in  this  direction,  and  on 
occasions   when    the   work    is    especially    heavy    in    any    one    department, 


404  TRUST   COMPANIES. 

employees  of  other  departments  may  be  encouraged  to  help  out — no  one 
being  permitted,  of  course,  to  slight  his  own  work.  He  is  a  short-sighted 
official  who  is  not  willing  to  answer  questions  and  explain  puzzling  prob- 
lems to  ambitious  employees  who  are  striving  to  become  masters  of 
different  departments  of  the  work.  If  an  employee  is  lacking 
in  education,  he  should  be  encouraged  to  utilize  such  opportuni- 
ties as  are  offered  by  the  night  schools  or  the  classes  conducted  under 
the  auspices  of  Young  Men's  Christian  Associations  in  the  cities.  An 
especially  valuable  mediimi  for  the  acquirement  of  knowledge  and  of 
training,  the  strengthening  and  broadening  of  character  and  the  stimula- 
tion of  ambition  is  found  in  the  work  of  The  American  Institute  of  Bank- 
ing, of  which  local  organizations  or  chapters  are  now  found  in  most  of 
the  large  cities,  and  in  many  Smaller  ones.  This  institute,  which  was 
organized  by  and  is  conducted  under  the  auspices  of  The  American 
Bankers'  Association,  is  doing  a  splendid  work  among  bank  and  trust 
com.pany  employees,  both  young  and  old,  and  should  receive  the  most 
cordial  support  from  every  wide-awake  trust  company  official. 


CHAPTER  Xr. 

SUNDRY  TOPICS. 
Fees. 

E.XCEPT  in  the  few  coniiuunities  in  which  trust  companies  are  so  wrll 
cstablislicd  that  there  is  something  approaching  a  standard  sihtd- 
ule  of  fees,  the  question  of  the  proper  charges  to  make  for  services 
rendered  by  the  trust  department  is  often  a  difficult  one.  Tliis  is  due  not 
only  to  the  fact  that  in  most  communities  there  is  no  set  standard  for 
guidance,  but  also  to  the  fact  that  a  number  of  matters  must  be  taken  into 
consideration — the  amount  of  clerical  work  involved,  the  knowledge  and 
training,  or  in  other  words  the  professional  skill,  required,  the  value  of 
the  service  to  the  customer,  and  most  importaTit  of  all,  the  degree  of  re- 
sponsibility, legal  and  moral,  assumed  by  the  company.  The  charge  may 
be  tempered,  too,  by  the  probable  incidental  profits  of  the  work  due  to 
new  business  obtained  thereby. 

That  there  exists  considerable  difference  of  opinion  among  trust  com- 
pany officials  regarding  the  matter  of  fees  has  been  shown  by  di.«cuss'o'iS 
at  the  conventions  of  the  Trust  Company  Section  of  the  American  Bank- 
ers' Association.'"  These  discussions  also  demonstrated  that  it  is  quite 
impossible,  even  if  desirable,  to  devise  a  uniform  scale  of  charges  Tor 
given  kinds  of  services  which  could  be  made  applicabh'  throughout  the 
country  or  even  throughout  a  state.  Local  conditions  vary  so  grcitly 
that  a  schedule  of  fees  suitable  for  one  locality  would  be  too  high  for  a 
second  and  too  low  for  a  third.  Indeed,  the  actual  value  of  the  ser>ice 
and  its  cost  in  labor  and  in  responsibility-  assumed  differ  so  much  that 
even  in  two  cases  of  the  same  kind  of  services  rendered  by  the  same  com- 
pany there  may  justly  be  diffVrcnt  scales  of  charges.  So  far  as  the  ser- 
vice is  professional  in  its  character,  the  matter  of  fees  is  subject  to  about 
the  same  considerations  as  the  determination  of  the  fee  of  the  lawyer,  and 
is  affected  by  the.  customs  of  the  community.  The  country  lawyer  expects 
to  receive  a  smaller  fee  than  the  lawyer  in  the  large  city,  and  he  often 
gauges  its  amount  in  part  by  the  value  of  the  service  to  the  client,  and  in 
some  cases  takes  into  consideration  the  latter's  financial  ability 

The  simplest  element  of  the  problem  is  the  amount  of  clerical  labor 
involved.  This  is  not  always  easy  to  determine  in  advance;  as,  for  ex- 
ample, in  the  work  of  transfer  agent,  in  which  the  amount  of  work  will 
depend,  after  the  original  issue,  upon  the  activity  of  the  stock.  When 
possible,  it  is  wise  to  defer  the  matter  of  fee  until  enough  expericr.ce  has 
been  gained  to  form  a  somewhat  reliable  estimate  of  the  amount  of  work 
required.  But  even  when  known  with  exactness,  the  amount  of  clerical 
labor  involved  should  be  a  matter  of  minor  importance  in  the  determina- 
tion of  the  fee. 


76  See    Proceedings    Tni-^t    ("onirurv    Sfotion.    in    p.irtloular   1904. 


406  TRUST   COMPANIES. 

The  professional  ability  demanded  is  a  matter  of  considerable  weight, 
and  this  factor  of  the  problem  should  ultimately  result  in  larger  fees  than 
are  prevalent  for  certain  services.  The  trust  company  is  held  liable  for 
sufficient  legal  and  technical  ability  and  carefulness  to  do  the  work  cor- 
rectly, and  is  entitled  to  proper  compensation  therefor. 

The  value  of  the  service  to  the  customer  is  an  important  consideration 
which  should  be  given  careful  study;  but  it  is  not  an  exact  means  of  de- 
termining the  fee.  A  corporation  may  require  the  services  of  a  trust  com- 
pany as  a  sine  qua  non,  but  would  hardly  consent  to  pay  a  fee  measured 
by  the  necessity  of  obtaining  the  service. 

The  benefit  which  may  accrue  to  the  company  in  the  way  of  new  busi- 
ness resulting  from  the  work  is  a  matter  worth  consideration,  especially 
by  new  companies  and  by  companies  located  where  the  trust  company  is 
not  firmly  established;  but  it  is  evident  that  this  consideration,  like  the 
cut-price  sales  of  the  merchant,  can  be  operative  only  in  exceptional 
cases.  One  can  not  always  do  business  at  less  than  cost  for  the  sake  of 
new  business  to  be  taken  on  the  same  terms. 

The  most  important  matter  of  all  is  the  responsibility,  both  legal  and 
moral,  which  the  company  must  assume.  This  is  in  some  cases  the  hardest 
thing  to  determine,  owing  to  the  absence  of  either  statutory  laws  or  court 
decisions  which  clearly  define  the  liabilities  of  trust  companies  acting  in 
certain  capacities,  and  owing  to  the  ignorance  of  the  public,  which  is  apt 
to  hold  the  trust  company  morally  responsible  in  case  of  loss  upon  any 
document  upon  which  the  trust  company's  name  appears  in  any  capacity. 

Fees  for   Acting   as   Executor,   Etc. 

Fees  for  services  as  executor,  administrator,  guardian,  etc.,  are  in 
maxix  states  fixed  by  statute,  or  are  determined  by  the  court,  and  are  the 
same  for  a  trust  company  as  for  an  individual.  In  New  York  the  statute 
fixes  the  fees  at  five  per  cent,  upon  the  first  $1,000,  2^  per  cent,  upon 
the  next  $10,000,  and  one  per  cent,  upon  all  over  $11,000  of  the  princi- 
pal, with  an  annual  fee  on  the  income  at  the  same  rates.  No  fee  is  al- 
lowed upon  the  value  of  the  real  estate  unless  same  is  sold  under  order  of 
the  court.  In  cases  of  extraordinary  difficulty  or  responsibility  the  court 
may  increase  such  fees.  In  Ohio  the  statute  fixes  the  fees  of  executors 
and  administrators  at  six  per  cent,  upon  the  first  $1,000,  four  per  cent, 
upon  the  next  $4,000,  and  two  per  cent,  upon  the  excess  over  $5,000  of 
personal  property.  The  Missouri  statute  allows  executors  and  adminis- 
trators a  commission  of  five  per  cent,  upon  disbursements  of  personal 
propei-ty. 

These  rates  usually  serve  as  the  basis  for  determining  fees  of  testa- 
mentary trustees  and  fees  in  any  trust  coming  through  law  or  by  appoint- 
ment of  the  court,  and  are  guides  in  fixing  the  charges  for  the  care  of 
estates  held  in  trust  from  whatever  source. 


SL'XDRV  TOPICS.  107 

Fees  for  Care  of  Estates  Under  Private  Agreement. 

When  the  trust  comes  by  private  agreement,  the  company  is  of  course 
at  liberty  to  make  the  best  terms  it  can  as  to  fees.  In  one  large  eastern 
city,  the  usual  charges  are  one  per  cent,  on  the  principal,  often  payable 
one-half  at  the  beginning  and  one-half  at  the  termination  of  the  trust, 
and  an  annual  fee  of  ^Y^  per  cent,  on  the  income  if  the  funds  are  invested 
01  to  be  invested  in  coupon  bonds  or  stocks.  If  part  is  in  real  estate, 
some  companies  make  the  charge  on  income  five  per  cent.,  handling  the 
real  estate  themselves,  wliile  others  keep  the  charge  at  2l^  per  cent.,  first 
deducting  an  outside  real  estate  broker's  charge  for  handling  the  real 
estate.  In  another  city,  common  charges  are  two  per  cent,  on  the  prin- 
cipal at  tlie  termination  of  the  trust,  with  an  annual  commission  on  the 
income  of  three  per  cent,  on  that  part  derived  from  personal  securities 
and  five  per  cent,  on  that  part  derived  from  real  estate.  In  some  places 
the  charge  is  five  per  cent,  on  the  income  without  reference  to  whether 
the  estate  owns  real  property.  Another  scale  of  charges  employed  is  a 
commission  of  from  one-half  per  cent,  to  one  per  cent,  for  the  investment 
or  reinvestment  of  the  principal,  payable  at  the  times  such  investments 
are  made,  and  from  three  per  cent,  to  five  per  cent,  on  the  income  accord- 
ing to  the  proportion  of  the  principal  invested  in  real  estate. 

Fees  of  ax  Assignee  or  Receiver. 

The  fees  allowed  to  an  assignee  or  a  receiver  are  fixed  by  statute  or 
determined  by  the  court.  In  New  York  the  assignee's  fee  is  five  per  cent, 
on  the  whole  sum  handled,  and  the  receiver's  fee  is  fixed  by  the  court  at 
a  figure  not  exceeding  five  per  cent.  The  receiver  of  a  corporation  may 
receive  five  per  cent,  on  the  first  $100,000  received  and  disbursed,  and 
S^A  per  cent,  on  the  excess  over  $100,000;  but  the  total  fee  may  not 
exceed  $12,000  for  any  one  year,  nor  be  greater  than  at  the  rate  of  $12,- 
000  per  annum  for  a  fraction  of  a  year. 

Fees  as  Tristee  Under  a  Bond  Issie. 

Fees  for  acting  as  trustee  under  a  bond  issue  are  generally  based  on 
a  charge  of  a  certain  amount  per  bond,  the  amount  in  many  cities  being 
one  dollar  a  bond  for  small  issues  and  fifty  cents  a  bond  for  large  issues. 
The  terms  "large"  and  "small"  are  of  course  relative,  and  their  interpre- 
tation differs  according  to  local  circumstances.  In  some  places  the 
dividing  line  is  at  about  $200,000;  in  others,  $500,000  or  $1,000,000. 
Sometimes,  especially  in  small  issues,  a  special  counsel  fee  is  added, 
sometimes  not.  Some  companies  make  a  minimum  charge  of  $100  cover- 
ing everything.  There  is  a  well-defined  feeling  in  many  quarters  that 
the  ]irevnlent  fees  for  this  work  are  much  too  small  in  view  of  the  fact 
that  the  legal  and  moral  liabilities  assumed  are  not  well  determined,  and 
may  be  much  larger  than  is  generally  realized. 

There  is  considerable  diff'erence  of  opinion  regarding  fees  for  the 
payment  of  coupons.     In  New  York,  where  th<    use  of  money  for  ten 


408  TRUST  companip:s. 

days  is  of  more  value  than  elsewhere,  it  is  generally  considered  that  if 
the  money  for  the  payment  is  deposited  from  ten  to  thirty  days  before 
the  coupons  mature,  the  use  of  the  money  is  sufficient  remuneration  for 
the  work  and  responsibility  undertaken.  If  the  money  is  not  deposited 
in  advance,  many  companies  make  a  charge  of  from  one-eighth  to  one- 
fourth  of  one  per  cent.  In  places  where  the  use  of  money  for  short 
periods  is  not  so  valuable,  some  companies  make  the  charge  unless  the 
funds  have  been  on  hand  for  a  considerable  period.  Similar  considera- 
tions hold  in  the  matter  of  charge  for  the  disbursement  of  a  sinking  fund. 

Fees  as  Transfer  Agent. 

The  fees  for  acting  as  transfer  agent  for  stock  depend  upon  the  cap- 
italization and  upon  the  activity  of  the  stock.  The  latter  element  is  often 
hard  to  determine  in  advance,  though  the  character  of  the  corporation 
gives  some  clue;  the  stock  of  a  railroad,  for  example,  being  apt  to  be  more 
active  than  that  of  a  bank.  By  some  it  is  recognized  as  a  general  principle 
that  the  fees  of  the  transfer  agent  should  be  double  those  of  a  registrar. 
Minimum  fees  for  very  small  and  inactive  issues  range  from  $50  to  $100 
a  year,  the  fees  for  large  and  active  issues  running  into  several  thousand 
dollars.  In  view  of  the  responsibilities  assumed,  and  of  the  fact  that  a 
single  clerical  error  in  this  work  may  prove  very  costly,  the  prevalent 
fees  seem  inadequate. 

The  reader  should  bear  in  mind  that  the  fees  above  stated  are  by  no 
means  universal,  and  are  given  here  only  to  convey  an  idea  of  the  charges 
made  by  some  companies.  The  fees  for  other  kinds  of  services  vary  so 
much  and  depend  so  largely  upon  the  peculiar  circumstances  of  each  case^ 
that  an  attempt  to  state  customary  charges  would  be  useless. 

Foreign  Exchange. 
Most  trust  companies  sell  drafts  on  foreign  countries,  traveller's 
checks  and  letters  of  credit;  but  as  most  of  them  do  so  through  banking 
houses  which  make  a  specialty  of  that  class  of  business  and  which  issue 
full  instructions  as  to  procedure,  it  is  unnecessary  to  discuss  the  subject 
here.  A  few  large  trust  companies  conduct  thoroughly  equipped  foreign 
exchange  departments. 

Time-and-Labor-Saving  Devices. 
The  past  generation  has  witnessed  the  introduction  into  the  business 
world  of  a  number  of  devices  which  save  time  and  labor,  and  which  are 
peculiarly  useful  to  banks  and  trust  companies.  Manv  of  them  are  no 
longer  classed  as  mere  conveniences  but  have  become  absolute  necessities 
for  the  larger  companies.  Among  these  are  the  typewriter,  the  telephone 
and  the  adding-machine.  Except  in  very  small  companies,  the  tvpewriter 
is  universally  used  for  correspondence  and  similar  work,  and  even  book 
entries,  especially  for  such  records  as  the  trust  register,  are  being  made 
by  the  use  of  the  book  typewriter.  An  increasing  amount  of  business  is 
being  conducted  by  telephone,  the  larger  companies  maintaining  private 


SUNDRY  TOPICS.  40<> 

exchanges  connecting  cacli  desk  with  the  other  desks  in  the  office  and  with 
the  outside  world.  The  long-distance  teki)]ione  enables  the  official  of  a 
trust  company  in  Chicago  to  transact  business  in  New  York  in  a  few 
minutes,  without  leaving  his  desk.  The  adding-machine  not  only  lists 
and  adds  long  columns  of  figures  more  quickly  and  more  accurately  than 
can  be  done  by  the  most  expert  bookkeeper,  but  has  become  indispensable 
in  companies  which  handle  large  volumes  of  business.  By  its  use  the 
taking  of  trial  balances  of  thousands  of  accounts  is  made  a  short  and 
simple  operation.  Its  value  is  increasing  as  new  uses  to  which  it  may  be 
put  are  discovered. 

The  work  of  the  teller  is  lightened  by  the  use  of  coin  counters  and 
other  conveniences.  Duplicating  machines  enable  the  advertising  depart- 
ment to  send  out  duplicate  letters  which  are  hard  to  distinguish  from 
originals.  Commercial  ))honogra])hs  make  it  possible  for  an  officer  to 
dictate  letters  and  other  matter  at  such  odd  moments  as  he  finds  conven- 
ient, without  wasting  the  time  of  the  stenographer  wliilc  waiting  during 
the  numerous  interruptions  to  which  he  is  always  subject.  A  more  re- 
cently introduced  device  is  the  telautograph,  which  reproduces  writing  at 
a  distance.  By  its  employment  the  teller  may  write  at  his  desk  an  in- 
quiry regarding  an  account  which  is  reproduced  immediately  at  the  desk 
of  the  proper  bookkeeper.  The  latter  writes  his  reply,  which  is  at  once 
before  the  teller,  who  is  thus  enabled  to  get  the  needed  information 
quickly,  silently  and  without  attracting  the  attention  of  the  customer. 
Numerous  other  devices  of  greater  or  less  importance  are  included  in  the 
equipment  of  the  most  progressive  companies.  A  judicious  use  of  these 
improvements  enables  the  company  to  do  better,  neater  and  quicker  work, 
st  a  saving  over  old  methods. 

Branch  Bankino. 

In  a  few  places  in  wliieli  tht  laws  of  the  state  permit,  trust  companies- 
are  conducting  a  branch  banking  business  with  such  success  as  to  make  it 
highly  jirobable  that  the  plan  will  spread  in  the  near  future  to  other 
localities  and  to  other  companies.  The  same  advantages  are  gained  th^t 
are  urged  in  favor  of  the  Canadian  branch  banking  system,  except  as  to- 
currency,  though  of  course  on  a  much  smaller  scale.  A  central  office  is 
maintained  in  tiie  down-town  portion  of  a  large  city,  and  the  branches 
are  scattered  through  the  outskirts  of  the  city  and  through  the  suburban 
towns.  In  this  way  communities  which  are  unable  to  support  independent 
savings  banks,  or  at  best  only  small  ones,  are  enabled  to  have  all  the  ad- 
\antages  afforded  by  the  strongest  companies.  The  confidence  insjiired 
by  such  n  strong  institution  attracts  deposits  which  had  not  theretofore 
been  in  banks  at  all.  Money  is  brought  into  communities  needing  it, 
while  from  those  localities  which  have  a  surplus,  funds  are  transferred 
to  the  central  office  or  to  the  other  branches  where  the  money  can  be  used 
to  advantage.  From  the  standpoint  of  the  company,  deposits  are  mate- 
rially increased,  while  the  circle  of  friends  who  may  furnish  business  for 
departments  oth(  r  than  the  banking  department  is  widened. 


410  TRUST   COMPANIES. 


Banking  by  Mail. 


Trust  companies  have  been  among  the  leaders  in  the  promotion  of  the 
Lanking-by-mail  business,  which  is  really  only  a  part  of  the  growing  sys- 
tem of  "mail-order  business."  As  applied  to  banking,  this  is  not  alto- 
gether recent  in  principle,  since  people  have  for  many  years  occasionally 
sent  deposits  and  made  withdrawals  from  accounts  through  the  mails. 
The  conducting  of  regular  banking-by-mail  departments  and  the  effort 
to  build  up  this  class  of  business  are,  however,  phenomena  which  have 
■originated  during  the  past  decade.  The  Pittsburgh  Bank  for  Savings 
claims  to  have  originated  the  first  systematic  banking-by-mail  department 
in  .the  year  1898.  Its  deposits  at  that  time  amounted  to  $3,350,000,  and 
in  three  and  one-half  years  were  increased  to  $12,250,000-;  a  considerable 
part  of  the  increase  being  ascribed  to  advertising  for  mail  business.  A 
number  of  trust  companies  and  savings  banks  are  now  conducting  such 
departments  and  meeting  with  much  success.  Pittsburgh  and  Cleveland, 
because  of  their  four  per  cent,  interest  rates  paid  by  solid  concerns,  have 
some  advantage  in  this  class  of  business;  but  the  possibility  of  getting 
mail  business  is  by  no  means  dependent  upon  the  interest  rate.  It  appeals 
to  manj^  classes  of  people  because  of  its  convenience  and  because  it  offers 
one,  no  matter  where  located,  the  opportunity  to  leave  his  savings  in 
charge  of  a  strong  institution.  Even  in  the  cities  it  is  often  more  con- 
venient to  mail  a  deposit  than  to  carry  or  send  it  to  a  bank ;  but  the  special 
advantage  of  course  accrues  to  joersons  more  or  less  isolated,  farmers  and 
residents  of  small  towns  having  no  savings  banks — which  includes  some- 
what over  seventy  per  cent,  of  the  people  of  this  country.  The  extension 
of  the  rural  free  delivery  of  mail,  and  the  general  improvement  of  the 
postal  system,  are  of  course  great  aids  to  the  business. 

The  method  employed  in  conducting  the  business  is  simple.  Upon 
receipt  of  an  inquiry,  a  letter  is  sent  with  which  is  enclosed  a  signature- 
card  and  a  circular  describing  the  method.  If  the  inquirer  decides  to 
open  an  account,  he  has  but  to  place  his  signature  and  address  on  the 
■card  and  mail  it  with  his  initial  deposit  to  the  company.  He  receives  in 
i;eturn  a  pass-book,  which  in  future  transactions  can  be  mailed  back  and 
forth  as  deposits  or  withdrawals  are  made,  or  can  be  left  at  the  com- 
pany's office.  In  the  latter  case,  a  separate  receipt  is  sent  for  each  de- 
posit. The  pass-book  is  made  light  enough  to  be  carried  with  a  letter 
and  a  check  for  one  stamp.  The  depositor  may  send  his  deposits  in  the 
form  of  New  York  draft,  postal  money  order,  personal  check  or  in  cur- 
rency by  registered  mail.  As  to  the  safety  of  such  remittances,  the  large 
companies  doing  a  banking  by  mail  business  advertise  that  so  far  as  they 
know  not  a  dollar  has  yet  been  lost  in  making  them.  Remittances  to  de- 
positors are  made  upon  receipt  of  letters  requesting  same,  by  New  York 
•draft;  or,  if  specially  requested,  by  postal  money  order. 

Trust  Company  Offices  and  Buildings. 

There  is  observable  among  trust  companies  a  growing  tendency  to 
purchase  or  construct  buildings  of  their  own.     Such  a  course  assures  a 


SUNDRY  TOPICS.  411 

permanent  location,  gives  an  impression  of  stability,  and  otton  proves  of 
value  as  an  investment.  Frequently  it  is  the  only  means  of  getting  the 
exact  location  desired,  or  of  insuring  the  most  convenient  arrangement 
of  the  offices. 

Whether  occu|)ying  its  own  building  or  rented  quarters,  the  progres- 
sive company  finds  it  profitable  to  maintain  offices  which  are  attractive  and 
convenient.  The  standard  of  office  equipment  is  such  that  the  public  ex- 
pects a  bank  or  trust  company  to  occupy  well  furnished  quarters,  so  that 
the  cost  of  a  good  cquijiment  is  more  than  repaid  in  advertising  value. 
The  lobby  should  be  provided  with  all  possible  conveniences  for  custom- 
ers, including  writing-desks  supplied  with  good  ink,  clean  pens  and  blot- 
ters, comfortable  chairs,  etc.  The  larger  comjianies  often  provide  sepa- 
rate reading  and  lounging-rooms  for  customers,  with  current  newspapers 
-and  magazines,  writing-desks  and  other  conveniences,  and  committee- 
rooms  for  the  use  of  customers  who  wish  to  meet  to  arrange  details  of 
Inisiness.  In  many  cases  there  are  special  quarters  for  women,  equipi)ed 
with  numerous  conveniences  and  in  charge  of  a  matron  who  looks  after 
the  comfort  of  jvitrons. 

The  quarters  of  tellers,  bookkee})crs  and  other  employees  should  be 
arranged  and  equipped  with  a  view  to  safety,  neatness,  convenience,  sav- 
ing of  time  and  labor  and  the  health  of  the  Avorkers.  Attention  to  these 
-matters  is  amply  repaid  in  better  service.  The  matters  of  light  and  fresh 
air  are  of  sj)ecial  importance;  when  possible  the  arrangement  should  be 
such  tliat  the  light  comes  from  back  of  the  workers,  and  a  well-considered 
ventilating  system  should  be  adopted.  There  is  economy  in  the  use  of 
up-to-date  office  furniture  and  conveniences.  Steel  is  coming  to  take  the 
place  of  wood  in  the  construction  of  filing  cases  and  cabinets  for  keeping 
pajiers  and  records  Avhich  are  brought  out  of  the  vaults  during  the  day. 

In  the  general  arrangement  of  the  offices  the  quarters  of  the  banking 
and  savings  departments  usually  occujiy  the  location  most  convenient  for 
customers.  The  trust  and  other  dejiartments  having  fewer  visitors  are 
located  at  the  rear  of  the  room  or  on  other  floors  if  the  company  occupies 
more  than  the  ground  floor.  The  safe-deposit  department  is  usually 
located  in  the  basement,  but  is  sometimes  on  the  ground  floor.  In  the 
large  companies  the  equipment  of  this  department  is  exjjensive  and  as 
nearly  })erfect  in  the  safeguards  provided  as  modern  science  can  make  it. 
Besides  being  constructed  of  hardened  steel  with  massive  doors  opened 
with  time  locks,  the  vaults  are  protected  by  watchmen  on  duty  day  and 
night  and  in  many  cities  by  electrical  attachments  which  if  tampered  with 
sound  an  alarm  at  the  offices  of  detectives  who  are  prepared  to  investigate 
at  once. 

EXCIASIVE    TrIST    C'oMPANV    Brir.DINGS. 

In  places  where  the  price  of  land  is  not  very  high,  it  is  generally 
agreed  that  it  is  of  more  advantage  for  a  trust  comjiany  to  occupy  a  build- 
ing devoted  exclusively  to  its  use  than  to  have  quarters  in  an  office  building. 
In  large  centres  where  the  price  of  land  is  very  high  and  the  possibility 


412  TRUST   COMPANIES. 

exists  of  large  ineonic  from  the  rentals  of  an  office  building-,  there  is  quite 
a  wide  difference  of  opinion  as  to  whether  the  advantages  gained  by  an' 
exclusive  trust  company  building  offset  the  giving  up  of  opportunities  for 
revenue  from  an  office  building.  It  is  interesting  to  note  that  a  number 
of  prominent  and  successful  trust  companies,  as  well  as 
banks,  in  several  large  cities  have  had  faith  enougli  in 
exclusive  bank  buildings  to  make  the  investment,  and  that 
their  success  in  the  instances  in  which  the  buildings  have  stood  for 
several  years  has  justified  their  faith.  Among  the  companies  now  occupy- 
ing such  exclusive  trust  company  buildings  or  having  them  in  course  of 
construction  are:  The  Mississippi  Valley  Trust  Company  and  the  Mer- 
cantile Trust  Company  of  St.  Louis,  both  of  which  were  pioneers  in  this 
movement;  The  Illinois  Trust  and  Savings  Bank,  The  Northern  Trust 
Company  and  the  Central  Trust  Company  of  Illinois,  of  Chicago;  The 
Cleveland  Trust  Company  of  Cleveland;  The  Commercial  Trust  and 
Savings  Bank  of  New  Orleans;  The  People's  Trust  Company,  The  Title 
Guarantee  and  Trust  Company  and  the  Knickerbocker  Trust  Company 
of  New  York;  The  New  England  Trust  Company  of  Boston;  The  Ameri- 
can Security  and  Trust  Company  of  Washington;  The  Pennsylvania 
Company  for  Insurance  on  Lives  and  Granting  Annuities,  and  The 
Girard  Trust  Company,  of  Philadelphia. 

Whether  such  magnificent  exclusive  trust  company  buildings  as  these 
companies  and  others  have  are  profitable  from  the  standpoint  of  the  com- 
pany or  not,  there  is  no  question  that  they  add  very  materially  to  the 
beauty  of  the  cities  in  which  they  are  located,  and  reflect  credit  upon  the 
public  spirit  of  their  builders.  They  mark  a  step  toward  the  greater  ap- 
preciation for  art  and  architecture  shown  by  the  older  cities  of  Europe,, 
whose  banks  in  most  large  centres  greatly  excel  ours  in  this  respect. 


CHAPTER  Xn. 

THE  DUTIES  AND  LIABILITIES  OF  TRUST  COMPANIES  ACT- 
ING IN  VARIOUS  CAPACITIES." 

DiriEs   AS    Transfer   Agent. 

THE  duty  of  the  transfer  agent  is  to  act  for  tlie  issuing  corporation 
in  the  matter  of  making  transfers  of  the  ownership  of  its  stock 
from  one  holder  to  another.  This  involves  the  passing  upon  the 
regularity  and  legality  of  the  assignment  of  title;  the  noting  of  the  trans- 
action upon  the  transfer  books  of  the  corporation;  the  cancellation  of  the 
old  certificates  and  the  execution  and  delivery  of  new  certificates.  In- 
cidentally it  involves  the  furnishing  to  the  corporation  of  a  certified  list 
of  the  stockholders  whenever  the  books  are  closed  for  the  payment  of 
dividends,  and  at  otlu-r  times  as  demanded. 

The  performance  of  these  duties  requires  that  the  transfer  agent  be 
the  custodian  of  the  stock  books  and  the  seal  of  the  issuing  corporation 
and  of  a  supply  of  blank  certificates.  The  certificates,  bound  in  .book 
form  so  that  each  certificate  and  its  stub  form  one  page,  and  numbered 
consecutively,  are  before  delivery  to  the  transfer  agent  signed  by  the 
projH'r  officers  of  the  corporation.  The  face  of  the  certificate  usually  con- 
tains the  provision  that  it  is  not  valid  unless  countersigned  by  the  transfer 
agent.  On  its  back  is  usually  printed  an  assignment  of  the  stock  and  an 
irrevocable  power  of  attorney,  of  which  the  following  is  a  common  form: 

"For  value  received hereby  sell,  assign  and  trans- 
fer unto the  shares  of  capital 

stock  represented  by  the  within  certificate,  and  do  hereby 

irrevocably  constitute  and  appoint    .... 

attorney  to  transfer  the  said  stock  on  the  books  of  the  with- 
in-named company,  with  full  power  of  substitution  in  the 
premises. 


Dated IpO.  .. 

In  presence  of 


77  While  tlio  diitie.i;  of  trust  companies  acting  in  various  fiduciary  capacities 
are  fairly  well  established  by  custom  and  in  some  cases  by  legislative  enactment, 
their  exact  Uabilltlos.  especially  in  corporate  trusts,  such  as  those  of  transfer 
agent  and  registrar,  are  sometimes  undetermined  either  by  statute  or  by  court 
decisions,  and  are  the  subjects  of  wide  differences  of  opinion  among  trust  com- 
pany officials  and  among  lawyers.  In  the  following  discussion,  so  far  as  it  re- 
lates to  liabilities,  the  writer  has  endeavored  to  state  the  various  positions  taken 
by  different  writers  quoted,   to   whom  he  wishes  to  acknowledge  his   Indebtedness 


41  i  TRUST   COMPANIES. 

Before  making  delivery  of  a  certifieate,  the  transfer  agent  dates  it^ 
fills  in  the  name  of  the  now  holder  and  the  number  of  shares  represented, 
affixes  the  seal  of  the  issuing  corporation  and  attaches  the  proper  signa- 
ture to  the  transfer  agent's  certificate.  The  form  of  this  certificate  rec- 
ommended by  a  committee  of  the  Trust  Company  Section  of  the  American 
Bankers'  Association  reads  as  follows:'^ 

"Countersigned: 

Trust  Company,  as  Transfer  Agent, 

By ,  Secretary." 

At  the  time  of  accepting  an  appointment  as  transfer  agent,  trust  com- 
panies require  certain  information  from  the  issuing  corporation  regarding 
its  organization  and  the  issue  of  its  stock,  the  exact  nature  and  amount  of 
such  information  varying  according  to  the  polic}'^  of  the  trust  company. 
The  following  are  the  requirements  published  by  The  Old  Colony  Trust 
Company  of  Boston: 

"Corporations  desiring  the  trust  company  to  act  in  either  of  these 
capacities  (transfer  agent  or  registrar)  should  submit  the  following 
papers.     Additional  j^apers  will  be  called  for  if  required: 

(ct)  Certificate  of  incorporation  of  tl]e  company,  certified  by  the  Sec- 
retary of  State  of  the  state  where  the  corporation  is  domiciled. 

(6)  Minutes  of  the  organization  meetings  of  the  stockholders  and 
directors  of  the  company,  showing  compliance  with  the  necessary  formali- 
ties to  make  the  incorporation  legal,  such  minutes  to  be  certified  by  the 
clerk  or  secretary  of  the  company. 

(c)  By-laws,  similarly  certified. 

(d)  Copies,  similarly  certified,  of  ;'ll  votes,  both  of  stockholders  and 
directors,  authorizing  the  issue  of  stock  of  the  company,  together  with  the 
certificate  of  the  treasurer  or  other  proper  officer  stating  the  exact  amount 
of  stock  outstanding,  which  was  issued  under  each  of  such  votes.  If 
approval  by  the  state  is  necessary  in  any  form- — e.  g.,  by  railroad  commis- 
sioners— formal  evidence  of  svTch  approval,  and  generally  of  compliance 
with  all  conditions  precedent  to  the  issue. 

(e)  If  the  stock  is  issued  as  fully  paid,  evidence  that  such  is  the  case, 
either  in  the  form  of  a  certificate  of  the  treasurer  to  payment  in  cash  at 
par,  or,  if  the  law  of  the  state  permits  payment  to  be  made  otherwise 
than  in  cash,  then  satisfactory  proof  that  payment  has  been  made  in 
compliance  therewith. 

(,f)Copy  of  the  form  of  stock  certificate  which  is  to  be  issued,  and 
which  the  trust  company  is  expected  to  sign.  This  should  be  submitted 
for  approval  before  it  is  engraved. 


for  the  information  given  and  for  many  of  the  opinions  advanced.  It  is  perhaps 
hardly  necessary  to  remark  that  this  discussion  is  intended  merely  to  show  the 
different  views  that  are  current  on  the  subjects  treated,  and  does  not  pretend  to 
state  conclusions  ex  cathedra,  the  writer  making  no  claim  to  expert  knowledge  in 
the  mattei-.  In  any  ti-ansaction  other  than  one  which  is  absolutely  plain  and  sim- 
ple, no  trust  company  official  or  employee  should  proceed  without  competent  legal 
advice. 

7S  Proceedings   Trust   Company   Section,  1905.   p.    7. 


DUTIES  AND  LIAIJILITIES  OF  TRUST  COMPANIES,     n.". 

(g)  Vote  of  directors  certified  as  in  (h)  approving  the  form  of  stock, 
certificate;  also  vote  similarly  certified  appointing  the  transfer  agent 
and  agent  to  register  transfers  of  the  company. 

(/i)  List  similarly  certified  of  the  officers  and  directors  of  the  com- 
pany, with  sample  signatures  of  such  as  may  sign  certificates." 

Tlie  practical  work  of  transferring  stock  requires  a  high  degree  of 
intelligence  and  care  and  a  thorough  kn  wiedge  of  the  law  governing  such 
transfers.  The  risks  involved  aside  from  possible  clerical  mistakes,  er- 
rors in  bookkeeping,  dishonesty  or  gross  carelessness  on  the  part  of  the 
employees  who  actually  do  the  work,  include  mistakes  of  law  or  of  fact 
in  making  transfers  on  forged  endorsements,  or  on  insufficient  authority, 
or  in  violation  of  law,  especially  in  cases  of  certificates  held  by  persons  as 
trustees  for  others.  Certificates  endorsed  in  blank  are  often  presented  for 
transfer  by  persons  other  than  the  holders  of  record.  The  transfer  agent 
must  know  the  signatures  of  stockholders  or  otherwise  identify  them  be- 
yond question.  Where  stock  is  held  in  fiduciary  capacities,  the  agent  must 
know  the  terms  and  powers  under  which  it  is  held.  When  a  certificate  is 
presented  for  transfer,  the  transfer  clerk  should  know  that  the  certificate 
itself  and  the  power  of  attorney  accompanying  it  are  genuine;  that  the 
transferrer  is  legally  conijM  ti  nt  to  make  the  transfer:  that  no  notiet-  has 
been  gixfn  the  cotn));Miy  of  any  nntstanding  claims  against  the  stock:  that, 
in  the  absence  of  direct  notice,  thfre  is  no  implied  notice  of  claims,  such 
as  the  certificate  itself  may  give  when  standing  in  the  name  of  a  trustee. 

LlAHIMTIKS    AS    ThAXSFER    AgENT."" 

On  the  subject  of  the  exact  liabilities  assumed  by  the  transfer  agent 
iji  agreeing  to  perform  these  services,  there  is  a  considerable  difference  of 
opinion,  which  is  readily  accounted  for  by  the  fact  that  there  is  no  statute 
law  covering  the  case,  and  very  little  law  in  the  shape  of  court  decisions^ 
While  the  office  is  sometimes  undertaken  under  special  contract  which  do- 
tails  the  liabilities  to  the  issuing  eorjioration,  the  more  common  method  of 
appointment  is  by  a  mere  resolution  of  the  directors  of  the  issuing  cor- 
poration appointing  the  Blank  Trust  Company  as  the  transfer  agent  of  its 
stock,  and  the  acceptance  of  the  apjiointment  by  the  latter.  This  method 
assumes  that  the  duties  and  liabilities  of  the  position  are  so  well  known 
as  to  require  no  definition:  an  assumption  which  is  justified  so  far  as 
routine  duties  are  concerned,  but  which  as  to  liabilities  seems  inconsistent 


79  Readers  wishing  to  consult  fuller  discussions  of  this  subject  and  of  the  lia- 
bilities of  trust  companies  acting  as  registrars  are  referred  to  the  following  arti- 
cles, some  of  which  are  quoted  herein:  Proceedings  Trust  Company  Section  A. 
B.  A.  1S96-1903,  pp.  59-75.  article  by  Felix  Rackemann;  pp.  184-199.  article  by  Hen- 
ry J.  r.owdoin  and  discussion  of  same.  Proce«-dings  Trust  Company  Section  A.  B. 
A.  1904.  pp.  2S-41.  article  by  Jordan  J.  Rc.lllns:  pp.  S5-S6.  letter  from  Noble  R 
Jndah,  and  discussion  preceding.  Proceedings  Trust  Company  Section  A.  B.  A. 
1905.  pp.  6-S.  Report  of  Executive  Committee.  "The  Banking  Law  Journal."  Vol. 
XXII.  pp.  717-720,  article  by  C.  F.  Morris.  "Trust  Comp.inies"  Vol.  I,  pp.  41S-421, 
497-503.  609-613.  articles  by  Ross  Perry:  pp.  9S9-990.  article  by  E.  C.  Hebbard; 
Vol.  II,  pp.  416-41S.  article  by  Willar^  V.  King;  Vol.  III.  pp.  12-14,  article  by 
Charles  A.   Greene. 


416  TRUST   COMPANIES. 

with  the  divergent  opinions  held  by  officers  of  banks  and  trust  companies 
which  act  as  transfer  agents.  The  difference  of  opinion  does  not  concern 
what  the  trust  company  accepting  an  appointment  expects  and  intends  to 
undertake,  but  has  reference  to  possible  imijlied  and  incidental  obligations 
which  it  does  not  intend  to  assume,  but  for  which,  in  the  opinion  of 
■some  writers,  the  courts  may  hold  it  responsible.  "It  is  well  understood 
in  banking  and  trust  company  circles  that  the  transfer  agent  undertakes 
to  say  to  the  purchaser  of  the  stock  which  it  has  countersigned  no  more 
nor  less  than  that  such  stock  is  a  genuine  portion  of  the  capital  stock  of 
the  issuing  company,  that  the  said  company  has  been  duly  authorized  to  do 
business  by  the  Secretary  of  the  State  in  which  the  company  is  incorpor- 
■ated,  and  that  the  signatures  of  the  officers  to  the  certificates  of  stock  are 
genuine."^" 

XiABILITIES    OF    A    CORPORATION    AcTING    AS    ItS    OwN    TRANSFER    AgENT. 

Before  stating  the  variant  views  of  different  writers  on  the  subject; 
in  hand,  it  will  be  useful  to  inquire  into  the  extent  of  the  liabilities  of  cor 
porations  when  they  transfer  their  stock  through  one  of  their  own  officers 
or  employees.  It  is  of  course  beyond  the  scope  of  ihis  article  to  discuss 
the  law  of  stock  transfers,  concerning  which  elaborate  text-books  may  be 
read.  A  few  instances  showing  the  liabilities  involved  will  be  sufficient 
for  the  present  purposes. 

In  an  able  paper  on  the  subject  read  before  the  Trust  Company  Sec- 
tion of  the  American  Bankers'  Association,^^  Jordan  J.  Rollins  showed  that 
improper  transfers  may  arise  "Equally  through  honest  mistake,  negligence 
■or  fraud."  Illustrating  the  statement,  he  instances  cases  in  which  errors 
have  occurred  and  the  issuing  corporations  have  been  held  liable : 

(a)  Through  a  mistake  of  fact  where  the  title  to  stock  was  affected 
by  a  law  peculiar  to  a  foreign  state  or  country.  He  quotes  the  United 
States  Court  of  Appeals  that  "The  validity  of  a  transfer  of  stock  is  gov- 
erned by  the  law  of  the  place  where  the  corporation  is  created." 

(b)  Through  a  mistake  of  fact  where  the  title  to  stock  was  affected 
by  some  complicated  contractual  relation. 

(c)  Through  a  mistake  of  fact  where  a  person  acting  as  attorney  for 
•another  exceeded  his  authority  in  making  a  transfer. 

(^)  Through  fraud  on  the  part  of  the  officer  in  charge  of  transfers. 

As  a  brief  statement  of  the  responsibility  of  the  issuing  company,  he 
quotes  the  United  States  Supreme  Court  (Telegraph  Co.  vs.  Davenport, 
•97  U.  S.  369,  at  p.  371)  as  follows: 

"The  officers  of  the  company  are  the  custodians  of  its  stock  book, 
•and  it  is  their  duty  to  see  that  all  transfers  of  shares  are  properly  made, 
either  by  the  stockholders  themselves  or  persons  having  authority  from 
them.     If,  upon  the  presentation  of  a  certificate  for  transfer,  they  are  at 


80  C.    F.    Morris,    in    "Banking  Law   Journal,"   Vol.   XXII,   p.    718. 

81  Proceedings    Trust    Company    Section  1904,   pp.    29-33. 


DUTIES  AM)  LIABILITIES  OF  TRUST  COMPANIES.    417 

iill  doubtful  of  the  identity  of  the  party  olfering  it  with  its  owner,  or  if 
not  satisfied  of  the  genuineness  of  a  power  of  attorney  produced,  they 
cm  require  the  identity  of  the  party  in  the  one  case,  and  the  genuineness 
of  the  document  in  the  other,  to  be  satisfactorily  established  before  al- 
lowing the  transfer  to  be  made.  In  either  case  they  must  act  upon  their 
own  re.s[)onsibility.  In  many  instanc(rs  they  may  be  misled  without  any 
fault  of  their  own,  just  as  tlie  most  careful  person  may  sometimes  be  in- 
duced to  purchase  property  from  one  who  has  no  title,  and  who  may  per- 
haj)s  have  .-icquiri'd  its  jjossession  by  force  or  larceny.  Neither  tlie  ab- 
sence of  blame  on  the  part  of  the  officers  of  the  company  in  allowing  un- 
authorized transfer  of  stock  nor  the  good  faith  of  the  purchaser  of 
stolen  property,  will  avail  as  an  answer  to  the  demand  of  the  true  owner." 

He  also  quotes  the  Supreme  Court  of  Massachusetts  (Crocker  vs.  Old 
Colony  R.  R.  Co.,  137  Mass.  417)   as  follows: 

"^Vhen  a  transfer  of  stock  is  presented  to  a  corporation  it  is  bound  at 
its  j)eril  to  see  that  it  is  a  genuine  transfer  by  one  who  has  power  of  dis- 
position over  the  stock.  .  .  .  If  it  issues  a  certificate  upon  a  forged 
or  unauthorized  transfer,  the  real  owner  retains  his  property  in  tiie  stock 
and  the  corj)oration  may  be  liable  to  a  bona-fide  holder  of  the  new  cer- 
tificate." 

On  the  other  hand,  quoting  the   same  case: 

"If  a  proper  transfer  is  presented  to  a  corporation  it  is  its  duty  to 
issue  a  new  certificate  in  accordance  with  it,  and  if  it  refuses,  it  is  liable 
to   the   person   to    whom   the   transfer   is    made." 

Summing  up  this  jiortion  of  his  paper,  Mr.  Rollins  concludes,  "For 
all  loss  occasioned,  whether  by  fraud,  negligence  or  unavoidable  mistake, 
by  it  or  its  agents  in  the  transfer  of  its  stock,  such  corporation  is  abso- 
lutely liable,  and  no  excuse  can  mitig.ate  its  liability." 

Special  risks  are  involved  in  the  transfer  of  stock  at  the  instance  of 
executors,  administrators,  trustees  or  guardians.  In  a  series  of  articles  on 
this  phase  of  the  subject  in  "Trust  Companies"  magazine''-  Ross  Perry 
cites  a  number  of  cases  showing  the  character  of  the  risks.  These  include: 

(a)  A  case  where  stock  held  in  trust  under  a  will  was  ordered  dis- 
tributed by  a  lower  court  and  the  corporation  so  distributing  it  was 
afterwards  held  liable  l\v  the  Supreme  Court  of  the  state  (Tennessee), 
notwithst.mding  the  instructions  of  the  lower  court,  on  the  ground  that 
the  distribution  was  not  in  accordance  with  the  terms  of  the  will,  of  which 
the  cori)oraticn  had  or  ought  to  have  had  notice. 

(6)  A  case  where  the  trustees  under  a  will  transferred  stock  in  excess 
of  their  authority  and  used  the  ])roceeds  for  their  own  benefit,  and  the 
corporation  jiermitting  the  transfer  of  its  stock  was  held  chargeable  with 
a  knowledge  of  the  contents  of  the  will  which  was  spread  on  the  public 
records,  and  was  required  to  make  good  to  the  trust  estate  the  value  of 
the  stock. 

(c)   A  case  where  stock  held  by  executors  under  a  will   transferred 
same  to  themselves  as  trustees,  and  afterwards  to  "A.  R.,  Trustee,"  the 


S2  Volume    I.    pp.    4 IS,    407    and    609. 


418  TRUST  COMPANIES. 

latter  selling  the  stock  and  using  the  proceeds  for  his  oi»'n  purposes.  In 
an  action  to  recover  the  Court  of  Appeals  (of  Maryland)  answered  tlie 
plea  of  the  defendant  corporation  that  the  mere  word  "trustee"  gave 
them  no  notice  of  the  trust,  bj^  holding  that  having  been  once  informed 
of  the  will  and  its  provisions  affecting  the  stock  in  question,  that  knowl- 
edge continued  all  the  way  down,  and  the  company  was  bound  to  see  that 
the  trust  property  in  their  custody  was  protected  and  not  misappropriated, 
and  required  it  to  make  good  the  loss. 

(r/)  A  case  where  a  transfer  on  the  order  of  an  executor  caused  loss 
to  a  corporation  because  the  executor  had  not  complied  with  the  law  of  the. 
testator's  domicile  before  selling  the  stock  so  transferred. 

a\Ir.  Perry  further  shows  that  where  stock  is  transferred  to  a  trustee, 
executor,  administrator  or  guardian  in  an  investment  of  trust  funds,  the 
corporation  permitting  such  transfer  of  its  stock  may  be  held  liable  in 
case  such  investment  of  trust  funds  is  against  positive  prohibition  of  law. 

It  must  be  evident,  without  further  discussion  of  this  topic,  upon 
which  volumes  have  been  written,  that  the  corporation  which  transfers  its 
own  stock  is  subject  in  the  matter  of  such  transfers  to  very  grave  re- 
sponsibilities. 

Rfsponsibiltty    of   the    Separate    Transfer    Agent. 

How  much  of  this  responsibilitj^  does  the  trust  comjiany— -or  .^ny  other 
separate  transfer  agent — assimie?  Is  the  relation  between  the  issuing 
corporation  and  the  transfer  agent  that  of  simple  agency,  and  the  re- 
sponsibility of  the  agent  limited  to  the  exercise  of  good  faith  and  ordi- 
nary skill  and  carefulness;  or  does  the  agent,  in  assuming  the  duties  con- 
nected with  the  transfer  of  stock,  also  assume  all  of  the  responsibilities  in 
conjiection  with  such  transfers  that  the  issuing  corporation  would  itself 
have  if  no  separate  transfer  agent  were  appointed  }  This  is  a  question  of 
most  vital  importance  to  the  trust  company — a  question  concerning  which 
opinions  differ  widely,  and  upon  which  the  courts  have  not  passed. 

Those  who  incline  to  the  opinion  that  the  courts  may  hold  the  transfer 
agent  liable  for  more  than  simple  agency  call  attention  to  the  causes  which 
have  brought  about  the  emploj'ment  of  separate  transfer  agencies,  to  the 
purposes  which  they  now  serve  and  to  the  possible  liability  to  two  par- 
ties— the  issuing  corporation  and  the  interested  public.  Recognizing  the 
fact  that  convenience  and  the  demands  of  business  were  jDotent  factors  in 
establishing  the  custom,  they  maintain  that  the  demand  of  the  public  for 
additional  safeguards,  outside  of  any  that  the  issuing  corporation  itself 
could  furnish,  was  an  important  factor,  and  is  to-day  perhaps  the  strongest 
single  reason  why  a  corporation  wishing  to  market  its  stock  must  have 
the  same  transferred  by  a  responsible  bank  or  trust  company.  They  show 
that  the  stock  exchanges  generally  require  the  appointment  of  such  agen- 
cies as  a  prerequisite  to  the  listing  of  the  stock,  and  that  the  public  would 
regard  the  omission  of  the  appointment  of  a  transfer  agent  as  suspicious 
and  irregular.  They  argue  that  it  is  evident  that  the  general  public  looks 
upon  the  transfer  agent  as  practically  a  guarantor,  separate  and  aside 


DUTIES  AND  I.IAIHLITIKS  OF  TRL'ST  COMPANIKS.     ll<) 

from  the  issuiiif>;  corporation,  that  a  certificate  of  stock  bearing  its  signa- 
ture is  absolutely  valid,  and  that  the  holder  will  be  protected  by  it;  and 
they  think  it  a  fair  question  whether  the  courts,  when  a  test  comes,  will 
not  hold  to  the  public's  view  of  the  case.  As  between  the  principal  and 
agent,  tlicy  point  to  the  fact  that  one  of  the  contributing  reasons  for  the 
agency  from  the  standpoint  of  the  former  is  the  supposition  that  the  trust 
company  is  an  expert  in  such  work,  possessed  of  superior  facilities  and 
endowed  with  thorough  knowledge  of  the  law,  and  therefore  to  be  held 
accountable  for  more  than  ordinary  skill;  also  to  the  fact  that  the  prin- 
cipal ordinarily  surrenders  to  the  agent  the  entire  control  of  the  transfer 
of  its  stock,  thereby  i)laeing  beyond  its  own  reach  any  powei  to  prevent 
improper  transfers,  except  of  course  in  a  few  cases  in  which  it  may  have 
special  knowledge  and  instruct  the  agent. 

"  .  .  .  In  view  of  the  causes  which  have  resulted  in  the  office  and 
custom,  and  of  the  practically  absolute  control  exercised  in  most  instances 
by  the  agent,  it  is  certainly  prudent  for  us  to  anticipate  that  the  courts 
will  decide,  when  a  ))roper  ease  is  jiresented.  that  the  agent  is  responsible 
to  its  principal  in  the  full  measure  of  the  consequences  resulting  to  the 
principal  for  any  acts  of  the  agent.  ,  .  .  Can  it  be  successfully  ar- 
gued that,  while  the  agent  agreed  to  perform  the  work,  and  accepted  a 
cash  consideration  therefor,  the  responsibility  for  the  conse(|uence  of 
mistake,  however  innocent,  impliedly  remains  where  it  formerly  rested, 
upon  the  j)rineipal.  it  having  parted  with  the  control  of  the  situation  ? 
I   apprehend  not."'*'^ 

"The  office  not  being  a  creation  of  tjie  cori)oration  by  reason  of  any 
inability  on  its  jiart  to  perform  the  duties  involved,  but  being  rather  a 
system  wliieh  custom  and  stock  exchange  rules  have  forced  upon  it,  there 
is  reasonable  ground  for  query  as  to  whether  the  agent,  intervening  as  it 
does  between  the  corporation  and  the  public,  does  not  stand  for  the  cor- 
poration in  its  relation  to  the  public,  and  itself  assume  the  liabilities  for 
a  careful  and  responsible  handling  of  the  stockholders'  interests,  for 
over-issues,  and  fraudulent  issues  of  stock,  and  for  the  many  other  forms 
of  fraud,  the  liability  of  which  would  fall  on  the  corporation  did  it  per- 
form these  functions  for  itself.  ...  In  this  state  of  the  law,  then, 
forecasts  as  to  how  the  courts  will  act  on  this  question  when  it  comes  up 
for  direct  decision  are  largely  speculative;  but  the  trend  of  decisions 
which  toueli  the  liorders  of  the  niatter,  and  the  application  of  established 
legal  priiu'iples,  would  seem  to  indicate  that  the  agent's  liability  to  the 
interestv^'d  j)ublic  will  be  settled  as  is  its  liability  to  the  corporation  for 
winch  it  acts;  that  the  injured  party  may  look  successfully  for  reim- 
bursement to  either  the  ag«'nt  or  the  corporation  or  both."''^ 

Those  who  hold  to  the  opposite  opinion  are  quite  as  decided  in  their 
views,  and  are  perhaps  more  numerous.  Their  position  is  stated  by  Philip 
S.  Babcock,  as  follows   ("Trust  Comjianies  "  magazine.  \'ol.   I.  p.  .s'j))  ; 

"I  contend  that  the  transfer  agent  is  an  agent,  pure  and  simple;  re- 
sponsible for  gross  and  wilful  neglect,  but  in  other  respects  simply  repre- 


ss Henry  J.    Bowdoin,   Proceedings    Trust  Company  Section   1S$I6-1903.   p.   ISS. 
84  Charles   A.    Greene.    In    "Trust    Companies"   magazine.   Vol.   III.   pp.    12.    13. 


420  TRUST   COMPANIES. 

senting  its  principal;  and  any  claims  against  the  agent  are  properly  ans- 
wered by  interposing  the  principal." 

Speaking  of  tlic  liability  to  the  principal,  Felix  Rackemann  says  in 
Proceedings  Trust  Company  Section  American  Bankers'  Association, 
1896-1903,  p.  62: 

"Lawyers  and  surgeons  hold  themselves  out  as  competent  and  learned 
and  skillful.  Should  either  make  a  mistake  from  failure  to  properly 
apply  some  settled  principle  of  his  profession,  he  would  be  negligent. 
On  the  other  hand,  either  might  advise  or  act  according  to  his  best 
judgment  in  respect  of  some  doubtful  or  unsettled  point,  and  though  in 
the  end  proved  wrong,  would  not  be  guilty  of  negligence.  So  with  the 
transfer  agent.  He  is  not  an  insurer  and  is  not  to  be  held  to  infallibility. 
He  must,  however,  be  cautious  and  vigilant.  For  an  honest  mistake  in  a 
matter  where  the  law  was  unsettled,  and  in  the  absence  of  judicial  deter- 
mination fairly  open  to  different  opinions  as  to  true  construction,  it  is 
hardly  conceivable  that  the  transfer  agent  could  be  liable  to  the  company." 

The  same  writer  says  regarding  liability  to  the  public  (page  66)  : 
"There  seems  to  be  no  ground  whatever  in  the  law  for  thinking  that 
a  trust  company,  acting  as  transfer  agent,  sustains  toward  the  share- 
holder of  the  stock  company  any  different  legal  relations  than  would 
exist  between  the  shareholder  and  a  small  salaried  clerk  in  the  office  of  the 
company  signing  the  same  certificate  as  'transfer  clerk.'  " 

After  calling  attention  to  the  fact  that  formerly  this  work  was  done 
by  such  transfer  clerks,  Mr.  Rackemann  continues: 

"It  was  never  suggested  that  such  transfer  clerk  'represented'  any- 
thing or  was  legally  liable  to  anybody,  so  he  conducted  himself  honestly. 
.  .  .  It  would  make  no  difference  in  the  law  whether  the  clerk  under 
the  old  practice  has  signed  himself  clerk  or  agent.  The  only  changes 
made  under  the  modern  system  are  that  the  word  'agent'  has  displaced 
the  word  'clerk'  and  financial  institutions  of  character  and  reputation 
have  displaced  the  individual  unfamed  clerks.  .  .  .  The  argument 
to  the  contrary  must  rest  upon  the  theory  that  the  signature  of  the  trans- 
fer agent  is  to  be  treated  as  an  authentication  by  one  who  has  contracted 
with  the  company  and  impliedly  imdertaken  with  each  investor  that 
only  true  and  perfect  instruments  shall  be  authenticated,  and  although  it 
must  be  admitted  that  the  agent's  signature  is  required  on  the  instrument, 
yet  it  must  at  the  same  time  be  remembered  that  the  object  of  the  added 
signature  has  not  been  to  gain  added  authenticity.  The  necessity  for 
the  agency  led  to  the  signature.  It  was  not  the  desire  for  the  signature 
as  an  authentication  which  led  to  the  agency.  A  railroad  ticket  is  not 
good  until  the  agent  has  put  his  office  stamp  and  date  upon  the  back. 
.  .  .  If  a  ticket  proves  bad  and  be  rejected,  would  it  be  claimed  by 
any  one  that  the  agent  was  individually  liable  because  he  had  'authenti- 
cated' the  ticket,  or  jDcrsonally  represented  anything  whatever  about  it  in 
the  act  of  stamping  it?  It  is  not  easy  to  see  any  distinction  between  the 
two  cases." 

Mr.  Rackemann  adds  that  in  his  discussion  he  has  been  referring 
"Only  to  those  cases  where  there  is  merely  the  signature  of  the  trust 
company,  and  the  words  'transfer  agent.'   It  may  well  be  that  the  addition 


I 


DUTIES  AM)  I.IAHlLiriKS  Ol     IKLSr  ( OM  I' AM  IS.     121 

of  some  very  simple  aiitl  harmless-sounding  M-ords  will  lead  to  very  impor- 
tant, further  and  diflerent  results."  He  particularly  warns  against  the 
use  of  the  word  "countersigned."  calling  attention  to  the  fact  that  "It 
has  been  held  in  at  least  two  cases  that  the  execution  of  an  instrument 
inider  the  word  'countersigned'  was  equivalent  to  a  direct  and  positive 
representation,  not  only  that  each  original  signature  was  genuine,  but  that 
every  legal  formality  esj^ential  to  the  full  legal  effect  of  the  instrument 
had  been  duly  observed  and  performed." 

Methods  of  Safkguardi.xg  the  Transfer  Agent. 

Whnti'ver  view  may  be  taken  of  the  situatit)n,  it  is  t\i(Kut  that  it  'S 
possible  that  the  liability  of  the  transfer  agent  might  be  held  greater  than 
trust  companies  acting  in  that  capacity  intend  it  to  be,  and  that  wisdom 
would  dictate  the  taking  of  all  possible  measures  to  prevent  such  a  possi- 
bility. A  committee  on  the  subject  appointed  by  the  Trust  Company 
Section  of  the  .\merican  Hankers'  Association  rt))orted  (  Froei  <  tlings 
Trust  Company  Section  1905,  pp.  6  and  7):  "Wliile  the  trust  companies 
do  not  admit  that  in  acting  as  transfer  agent  or  registrar  tluy  assume 
any  such  measure  of  responsibility  as  that  suggested  by  articles  read  be- 
fore the  convention  at  various  times,  it  would  be  desirable  to  eliminate 
absolutely  the  opportunity  for  any  claim  that  the  trust  company  serving 
in  either  capacity  is  liable  save  as  an  ordinary  agent.  Obviously,  there 
are  but  two  ways  in  which  liability  can  be  defined  in  advance;  either  by 
agreement  between  the  principal  and  agent  or  by  legislation.  The  latter 
was  recommended  in  the  article  under  consideration,  since  a  statute  would 
as  clearly  a  fleet  the  investing  public  as  the  company  issuing  the  stocks 
transferred  or  registered.  The  form  proposed  for  New  York  was  as 
follows:  *  *  *  (The  trust  company  shall  have  power)  'To  transfer, 
register  and  countersign  certificates  of  stocks,  bonds  and  other  evidences 
of  indebtedness  of  corporations,  with  liability  to  such  corporations  and  to 
the  owners  or  holders  of  such  certificates  of  stock,  bonds  or  other  evi- 
dences of  indebtedness  solely  for  the  negligence  or  wilful  misconduct  of 
its  officers  in  reference  to  such  certificates  of  stock,  bonds  or  other  evi- 
dences of  indebtedness,  or  in  the  appointment  or  employment  of  its 
agents,  clerks   or  employees   dealing  therewith.' 

If  in  any  state  it  shall  not  Ik-  possible  or  convenient  to  obtain  legisla- 
tion of  the  character  indicated  then  such  protection  as  may  be  afl'orded 
by  tlie  adoption  of  appropriate  endorsements  is  recommended." 

The  form  of  endorsement,  or  certificate  of  transfer  agents,  recom- 
mended in  this  re])ort  has  already  been  given. ^■'' 

Other  forms  of  protection  that  have  been  suggested  are  the  taking  of 
bonds  of  indemnity  in  doubtful  cases,  the  making  of  special  contracts  for 
the  agency  and  notifying  all  transferees  of  such  contract,  and  having  the 
transferees  subscribe  to  the  by-laws  of  the  issuing  company  in  cases  where 
such  by-laws  define  the  responsibility  of  the  transfer  agent. 

85  P.igo   414. 


422  TRUST   COMPANIES. 

The  following  "Suggestions  about  Stock  Transfers"  issued  by  the 
Old  Colony  Trust  Company  of  Boston,  and  used  here  with  its  permission, 
contain  valuable  hints  regarding  the  conduct  of  this  business: 

"Suggestions  About  Stock  Transfers. 

1.  Signatures  of  stockholders  on  stock  transfers,  when  unknown, 
must  be  verified  in  some  way  satisfactory  to  the  transfer  agent.  This 
will  usually  be  by  guarantee  of  some  member  of  the  Boston  Stock  Ex- 
change or  some  well-known  bank,  or  by  acknowledgment  before  a  notary 
public. 

2.  If  the  holder's  name  is  rightly  given  on  the  face  of  the  certificate, 
he  or  his  duly  authorized  attorney  should  sign  the  transfer  exactly  as  the 
certificate  is  made  out,  without  alteration  or  enlargement. 

3.  If  an  error  was  made  in  issuing  the  certificate,  the  transfer  agent 
should  be  informed  of  the  facts.  Do  not  make  corrections  on  the  face 
of  the  certificate.  If  the  assignment  is  filled  out  erroneously,  alterations 
should  be  made  in  ink  only,  leaving  the  original  writing  legible.  Do  not 
use  erasers  of  any  sort. 

4.  Enter  in  the  transfer  space  on  the  back  of  the  certificate  the  full 
name  of  each  person  to  whom  the  stock  is  to  be  assigned,  writing  out  the 
number  of  shares  to  be  so  transferred,  and  the  street  or  post-office  ad- 
dress of  the  transferee.  It  is  more  convenient  to  leave  the  attorney  space 
blank,  if  one  is  provided. 

5.  In  transferring  to  individuals,  use  the  full  Christian  name;  and, 
if  tJie  transferee  be  a  woman,  the  title  "Miss"  or  "Mrs."  Avoid  using 
diminutives. 

6.  In  transfers  to  a  married  woman,  use  her  own  Christian  name,  not 
her  husband's.  In  case  of  a  change  of  name  by  marriage,  send  the  stock 
certificate  to  the  transfer  agent  with  the  transfer  filled  out  to  the  correct 
name,  signed  after  this  manner, — "Mrs.  INIary  James,  formerly  Mary 
Jones,"  having  the  signature  properly  verified. 

7.  Assignments  to  a  corporation  or  association  should  give  the  com- 
plete legal  title. 

8.  Certificates  issued  to  a  minor  or  an  insane  person  should  bear 
the  guardian's  name;  for  example,  "John  Jones,  minor  (or  incompetent), 
under  guardianship  of  Henry  Jones."  If  a  transfer  is  desired  of  stock 
so  held,  a  recently  certified  copy  of  the  guardian's  appointment  should 
be  shown,  together  with  the  license  of  the  court  appointing  the  guardian, 
if  such  license  is  necessary  under  the  laws  of  the  state  having  jurisdiction. 
Termination  of  the  guardianship  should  be  shown  by  a  certificate  from 
the  court,  birth  certificate,  or  other  satisfactory  evidence. 

9-  On  certificates  issued  to  trustees  the  trust  must  be  fully  described, 
exact  reference  being  made  to  the  will  or  other  document  creating  the 
trust;  and,  whenever  possible,  the  name  of  the  beneficiary  should  be 
given. 

10.  Transfers  by  trustees,  where  a  power  of  sale  is  not  granted  by 
the  instrument  creating  the  trust,  cannot  be  made  without  license  from  the 
court  or  the  consent  of  all  the  beneficiaries.  In  every  case  the  instru- 
ment creating  the  trust  and  proper  evidence  of  the  trustee's  appointment 
should  be  exhibited.  If  there  is  more  than  one  trustee,  all  must  sign 
transfers. 


DUTIES  AM)  I.IAHIl.ITIKS  OF  THLST  COMPANIES.     123 

11.  Transfers  niado  by  administrators  or  executors  must  be  accom- 
panitd  by  a  recently  certified  copy  ot"  court  ajjpointuu-nt.  Wlieii  made 
by  executors  or  adminstrators  witlj  the  will  annexed,  of  estates  which  have 
beeh  in  probate  over  three  years,  a  certified  copy  of  the  will  should  be 
shown.  It'  there  is  more  than  one  administrator  or  executor,  a  majority 
should  sign. 

/2.  Trustees,  administrators,  executors,  guardians,  and  attorneys 
should  not  transfer  to  themselves  individually ;  nor  should  husband  and 
wife  transfer  directly  from  one  to  the  other,  unless  such  transfers  are 
authorized  by  the  laws  of  the  state  when  the  transfer  is  signed. 

13.  Transfers  from  corporations  or  associations  should  be  executed 
by  their  officials  duly  authorized  for  the  purpose,  and  accompanied  by  a 
certified  cojjy  of  the  vote  or  by-law  authorizing  the  transfer.  Such 
vote  or  by-law  should  be  certified  to  by  an  official  other  than  the  one 
signing  the  transfer. 

11.  Transfers  by  attorney  must  be  accompanied  by  the  original  or 
a  notarial  copy  of  the  power  of  attorney,  and  evidence  should  be  given 
that  the  signature  is  genuine.  Powers  of  attorney  can  be  recognized  only 
when  the  intent  of  the  maker  to  authorize  transfers  is  beyond  doubt,  and 
when  the  power  is  recent,  or  is  shown  to  be  still  in  force. 

15.  Papers  left  for  record  in  connection  with  transfers  by  trustees, 
executors,  etc.,  will  be  returned. 

16.  Prompt  notice  of  any  change  of  address  should  be  given  the 
transfer  agent  in  writing,  stating  the  name  of  the  company  in  which 
stock  is  held. 

17.  If  a  certificate  is  lost,  file  notice  to  that  effect  with  the  transfer 
agent  at  once,  giving,  if  possible,  the  certificate  number  and  number  of 
shares. 

IS.  In  transfers  of  stock  in  Massachusetts  corporations  by  foreign 
executors,  administrators,  or  trustees,  evidence  should  be  furnished  that 
the  transfer  is  not  liable  to  the  Massachusetts  collateral  inheritanee  tax. 
or  that  such  tax  has  been  paid. 

The  foregoing  suggestions  are  subject  to  change,  and  should  be  con- 
sidered for  guidance  only." 

The  following  general  rules  written  by  Frederick  \'ierling.  Trust 
Officer  The  Mississipjii  \'alley  Trust  Co.  of  St.  Louis,  also  contain  valu- 
able suggestions: 

"CiENKRAL    Rl'LES   FOR    IsSl'E   OF   CERTIFICATES   OF   StoCK. 

(1)  To  a  man,  issue  in  his  name,  giving  his  first  name  in  full  and 
not  merely  his  initial;  (2)  to  two  or  more  persons,  issue  in  their  full 
names,  unless  a  firm:  (3)  to  a  woman,  issue  in  her  name,  giving  her 
first  njtuie  in  full — and  make  record  as  to  whether  she  is  married  or 
unmarried — the  issue  to  a  married  woman  to  be  in  her  own  name  and 
not  that  of  her  husband:  i.  c,  Evelyn  M.  Blank,  not  Mrs.  Frederick 
Blank;  (1)  to  a  co-partnersliip.  issue  in  firm  name;  (5)  to  a  corpora- 
tion, issue  in  corporate  name — first  requiring  proof  that  corporation  is 
authorized  to  hold  shares  in  issuing  company;  (6)  do  not  issue  to  any 
sole   or  joint   fiduciaries   acting  under  order  of  court,   unless   they  first 


424  TRUST   COMPANIES. 

produce  certified  copy  of  order  of  court  showing  their  authority  to  take 
and  liold  shares;  (7)  do  not  issue  to  any  sole  or  joint  fidu^ciaries  acting 
under  written  instrument,  unless  they  first  produce  the  instrument  or  a 
certified  copy,  and  unless  under  the  instrument  or  the  law  relating  to  such 
trusts  they  have  authority  to  take  and  hold  the  shares — if  a  recorded 
instrument  keep  reference  to  record,  and  if  not  recorded  require  certified 
copy  for  files;  (8)  do  not  issue  to  a  fiduciary  or  to  fiduciaries  merely 
as  such  (as  A.  B.  trustee),  but  issue  to  an  authorized  sole  fiduciary 
or  to  joint  fiduciaries  in  their  names  in  full,  followed  by  full  designa- 
tion of  their  trusts — i.  e.,  A.  B.,  administrator  of  estate  of  C.  D., 
deceased;  A.  B.,  executor  under  will  of  C.  D.,  deceased;  A.  B.,  guardian 
of  C.  D.,  a  minor;  A.  B.,  trustee  for  C.  D.,  under  will  of  E.  F.,  de- 
ceased; A.  B.,  trustee  for  C.  D.,  under  indenture  of  trust  with  him  dated 
^rarch  1,  1907;  A.  B.,  agent  for  C.  D.,  imder  agency  agreement  with 
him  dated  March  1,  1907;  (9)  no  certificate  should  be  issued  to  any 
fiduciary,  unless  appointed  by  order  of  court  or  in  writing. 

General   Rules  for   Transfers   of   Certificates   of   Stock. 

(1)  Require  surrender  for  cancellation  of  outstanding  certificate 
representing  shares  to  be  transferred;  (2)  require  execution  of  assign- 
ment and  power  of  attorney  on  back  of  certificate  to  be  transferred  or 
have  properly  executed  form  attached,  the  signature  or  signatures  to  be 
in  the  exact  name  or  names  as  written  on  face  of  certificate,  and  must 
be  by  the  principals  themselves  or  by  their  legal  representatives  formally 
appointed  by  order  of  court  or  in  writing;  (3)  if  signature  to  assign- 
ment is  not  known,  require  same  to  be  acknowledged  before  a  notary 
public,  or  better  still,  have  it  guaranteed  by  some  responsible  person 
or  persons  who  are  known;  (4)  require  assignment  of  certificate  issued 
to  a  firm  to  be  executed  in  the  name  of  the  firm  by  a  general  partner; 
(5)  require  assignment  of  certificate  by  a  corporation  to  be  executed 
bv  its  president  or  a  vice-president  under  corporate  seal,  attested  by  its 
secretary  or  assistant  secretary,  and  accompanied  by  a  certified  copy  of 
by-laws  showing  authority  of  officers  or  certified  copy  of  resolution  of  its 
directors  authorizing  the  officers  named  to  assign  certificates;  (6)  where 
there  are  joint  fiduciaries,  require  all  of  the  acting  fiduciaries  to  join 
in  the  assignment;  (7)  where  assignment  of  certificate  is  by  a  fiduciary 
or  fiduciaries  acting  under  order  of  court,  require  certified  copy  of 
order  of  court  giving  authority  to  make  transfer;  (8)  where  assign- 
ment of  certificate  is  b}^  a  fiduciary  or  fiduciaries  acting  under  written 
instrument,  require  production  of  instrument  and  examine  carefully  and 
see  if  authority  to  make  trsnfer  is  clearly  given,  and  if  not  require  in 
addition  order  of  court  authorizing  the  transfer  and  place  certified  copy 
on  file— -if  the  instrument  is  recorded,  keep  reference  to  record  and  if 
not  recorded  require  certified  copy  for  files;  (9)  require  proof  that  any 
fiduciary  making  an  assignment  of  a  certificate  is  at  the  time  still  acting 


DUTIES  AND  LIABILITIES  OF  TRUST  COMPANIES.    4i>5 

as  suth  fiduciary;  (10)  transfers  by  fiduciaries  to  themselves  should  not 
be  allowed,  unless  at  the  time  they  are  sole  beneficiaries  of  the  trust  and 
the  trust  is  termin;<ted,  or  unless  specifically  authorized  by  order  of 
court  or  terms  of  instrument  creating  the  trust." 

For  a  fuller  discussion  of  this  subject,  see  list  of  articles  given  in 
note  at  heading  "Liabilities  as  Transfer  Agent." 

Duties  anu   Liabilities  as  Registrar   of   Stock. 

The  duty  of  the  registrar  of  stock  is  to  register,  or  record  tlie  issu<-  of, 
certificates  of  stock  after  they  have  been  issued  by  the  transfer  agent,  for 
the  purpose  of  preventing  an  over-issue  of  such  stock.  Before  assuming 
its  duties  the  registr.'.r  must  be  furnislied  Avitli  autlientic  information  as 
to  the  total  amount  of  stock  authorized  to  be  issued,  if  none  has  been 
issued;  or  as  to  the  total  amount  of  stock  authorized  to  be  issued  and  the 
amount  outstanding,  if  part  or  all  has  been  issued.  After  the  total 
amount  of  shares  authorized  to  be  issued  have  been  registered,  new  cer- 
tificates are  not  registered  except  upon  the  cancellation  of  outstanding 
certificates  for  the  same  number  of  shares. 

As  stated  by  Felix  Rackemann,  in  Proceedings  Trust  Company  Sec- 
tion 1896-1 903,  p.  73,  "In  practice  the  registrar  keeps  its  registry  list, 
and  as  stock  is  transferred  by  the  company  or  its  transfer  agent  it  re- 
ceives in  each  case  the  old  certificate  as  surrendered  and  the  new  certificate 
cs  prejiared  to  take  its  place,  it  compares  tlie  two,  it  notes  ujjon  its  reg- 
istry list  the  surrender  and  cancellation  of  the  old  and  the  issue  of  the 
new  in  substitution,  and  it  thereupon  identifies  the  new  certificate  by  its 
signature  upon  its  face  as  a  part  of  a  stated  authorized  issue." 

Upon  its  face  this  is  an  exceedingly  simple  operation,  involving  no 
greater  responsibility  than  a  guarantee  that  the  certificate  has  been  issued 
in  regular  form  by  the  transfer  agent  and  that  the  outstanding  registered 
stock  of  whicli  it  repr«'sents  a  ]>art  does  not  exceed  the  total  authorized  is- 
sue. This  is  the  limit  of  responsibility  which  a  trust  company  in  assuming 
the  office  of  registrar  intends  to  assume,  and  which  many  think  the  courts 
will  rule  it  actually  does  assume.  Yet  there  are  a  number  of  lawyers  and 
trust  company  officials  of  experience  who  incline  to  the  opinion  that  as  in 
the  case  of  the  transfer  agent,  the  courts  may,  when  a  case  actually  comes 
before  them,  hold  the  company  acting  as  registrar  to  liability  for  inciden- 
tal and  implied  obligations  which  it  has  not  intended  to  assume — some 
going  so  far  as  to  believe  that  "The  duties  and  liability  of  a  registrar  do 
not  differ  in  any  marked  degree  from  those  of  a  transfer  agent."'"' 

As  to  the  historical  origin  of  the  office  of  registrar  and  the  original 
and  present  purpose  of  its  employment,  there  seems  to  be  no  disagree- 
ment. The  practice  of  employing  registrars  was  a  result  of  the  disclos- 
ure in  18(5.'?  of  the  "Schuyler  Frauds."  in  which  Robert  Schuyler,  wh') 
was  president  and  also  transfer  agent  of  the  New  York  and  New  Haven 


S6  Henry  J.   Bowdoln.    Procepdlngs   Trust  Company   Section   1896-1903.    p.    194. 


426  TRUST   COMPANIES. 

Itailroad  Company,  fraudulently  over-issued  the  stock  of  his  company. 
As  a  safeguard  against  such  frauds  in  the  future,  the  New  York  Stock 
Exchange,  in  January,  1869,  adopted  a  rule  requiring  all  active  stocks  to 
be  registered  by  an  agency  approved  by  it.  "The  danger  of  over-issue 
was,  therefore,  the  single  operating  cause.  To  guard  against  such  danger 
was  the  single  object  of  the  Stock  Exchange  rule,  and  of  the  subsequent 
practice  adopted  in  compliance  with  that  rule."  (Rackemann,  as  above, 
p.  72.) 

It  is  evident  that  the  function  of  the  registrar  could  not  in  any  case 
be  exercised,  as  the  function  of  the  transfer  agent  could  be,  by  the  issuing 
corporation.  The  very  nature  of  the  office  requires  the  services  of  a  per- 
son or  corporation  entirely  distinct  from  the  company  whose  stock  is  to 
be  registered. 

The  liabilities  involved  are  at  the  present  purely  a  matter  of  opinion, 
as  there  is  practically  no  law  on  the  subject.  The  position  of  those  who 
believe  that  the  liabilities  involved  may  be  considerable  is  illustrated  in  the 
following  passage   (Bowdoin,  as  above)  : 

"Since  the  function  to  be  performed  by  the  registrar,  which  it  holds 
itself  out  as  competent  to  discharge,  is  that  of  a  check  against  the  trans- 
fer agent,  in  guarding  against  an  over-issue  of  stock,  it  becomes  necessary 
for  the  registrar  to  scrutinize  all  transfers,  since  the  issue  of  a  certificate, 
except  against  one  legally  cancelled  for  the  same  number  of  shares, 
would  necessarily  result  in  an  over-issue.  This  duty  the  registrar  im- 
pliedly, by  its  acceptance  of  the  office  and  fee,  agrees  to  discharge. 
Obviously,  if  the  registrar  certifies  the  issuance  of  a  certificate,  thereby 
placing  upon  it  the  last  and  highest  indicia  of  validity,  and  loss  results 
to  the  principal  therefrom,  the  registrar  has  failed  to  fulfill  the  purpose 
of  its  appointment;  if,  by  such  action,  loss  enures  to  a  stockholder  whose 
property  rights  have  been  wrongfully  divested  thereby,  cannot  such  stock- 
holder recover  from  the  registrar,  the  signature  of  the  latter  in  accej^tance 
and  approval  of  the  evidences  of  the  transfer  being  essential  to  the  trans- 
fer and  being  the  last  act  in  consummation  of  the  transaction  by  which 
the  stockholder  is  injured?  In  the  absence  of  an  expressed  agreement 
limiting  the  liability  of  the  registrar,  it  would  seem  that  the  acceptance 
of  the  office  carries  an  acceptance  of  responsibility  for  failure  to  properly 
perform  the  functions  of  the  office,  and  that  unless  such  limitation  of 
liability  is  brought  to  the  knowledge  of  the  stockholder,  and  of  those  who 
may  from  time  to  time  become  such,  the  acceptance  of  the  office  would 
also  imply  an  acceptance  of  responsibility  for  all  acts  of  the  registrar 
whereby  the  stockholder  is  wrongfully  deprived  of  his  property  interest 
in  the  stock.  Here  again  the  case  against  the  registrar  is  strengthened 
by  the  quite  customary  regulations  of  stock  exchanges  requiring  the  sig- 
nature or  counter-signature  of  a  registrar  as  essential  to  the  validity  of 
the  certificate." 

Referring  to  the  fact  that  the  word  "Registrar"  appears  in  the  opinion 
of  some  to  be  the  equivalent  of  "Guarantor,"  Yir.  Rackemann  says  (as 
above,  p.  72)  : 

"It  is  certainly  a  matter  calling  for  consideration,  because  a  popular 
notion,  or  conviction,  though  erroneous,  is  yet  quite  apt  to  have  its  natural 


DUTIES  AND  LIAHILITIES  OF  TRLST  COMIWNIKS.     u: 

<^ffVct  upon  the  judicial  mind."  and  In-  suggests  tlie  avoidance  of  the  wort! 
"Registrar,"  suggesting  in  its  place  "Agent  to  Register  Transfers." 

He  says  further  (p.  74,  as  above) : 

"If  the  registrar  of  stock  hy  the  registration,  makes  a  continuing 
representation  to  the  public  that  the  stock  is  valid  and  properly  issued, 
or  even  within  the  authorized  limit,  the  registrar  is  of  course  concerned 
to  know  tliat  each  transfer  is  properly  made  and  not  merely  that  a  former 
stock  certificate  is  mutilated  in  the  jirocess  known  as  cancellation.  Be- 
cause it  may  well  be  that  a  stock  certificate,  mutilated  in  cancellation  to 
the  satisfaction  of  the  most  fastidious,  would  still  remain  as  a  matter  of 
law  a  ])erfect]y  valid  stock  certificate  upon  which  th<-  sliareholder  named 
therein  would  continue  to  have  all  original  rights  and  claims.  .  .  . 
Should  the  transfer  agent,  therefore,  accept  an  old  certificate  and  'punch' 
it  in  cancellation  without  the  authority  jiroperly  given  by  the  true  owner, 
it  would  not  be  cancelled,  and  any  stock  certificate  ))ut  out  by  the  trans- 
fer agent  in  its  place  would  be  .an  over-issue,  and  the  registrar,  in  sign- 
ing the  new  certificate,  would  be  registering  over-issue  stock." 

Answering  his  own  question,  "What  does  such  registration  mean.'" 
Noble  B.  Judah  says  (Proceedings  Trust  Company  Section  1904,  p.  85): 

"To  my  mind,  the  answer  to  this  question  is  that  such  registration 
means  and  intends  more  tlian  simi)ly  that  the  trust  company,  as  agent 
for  the  company  the  stock  of  which  is  registered,  has  written  some  words 
on  the  certificate.  It  has  been  said  in  the  ])ast  that  the  trust  company 
simply  acied  as  the  agent  for  the  other  comj)any,  from  time  to  time,  in 
registering  the  respective  certificates;  and  it  seems  to  have  been  assumed, 
sometimes  at  least,  that  the  trust  company  was  under  no  responsibility 
to  the  person  taking  the  registered  certificates;  but  the  company  whose 
stock  is  registered  has,  if  its  affairs  are  honestly  .administered,  no  need 
on  its  own  part  for  such  registration.  Obviously  the  chief  puqiose  is  to 
give  the  purchaser  of  the  stock  to  understand  that  a  third  and  disin- 
terested ])arty  is  looking  after  the  stock  issues.  I  do  not  doubt  that  the 
courts  of  some  of  the  states,  at  least,  will  so  hold.  As  soon  as  it  is  ad- 
mitted that  the  registration  is  jirocured  for  the  pur]>ose  of  influencing 
third  parties,  it  is  very  necessary  that  their  rights  be  considered,  for  in 
such  case  there  will  be,  sooner  or  later,  decisions  holding  the  registrar 
to  financial  resj)onsibility." 

That  there  are  many  who  do  not  agree  with  these  views  is  shown  by 
the  practice  of  different  companies  in  the  method  of  conducting  the  work 
of  registration,  and  by  opinions  expressed  in  printed  articles.  Thus. 
Willard  V.  King  says  ("Trust  Companies."  Vol.  2,  i)p.  416-418)  that 
"We  all  do  in  New  York"  register  stock  "without  looking  into  the  formal- 
ity of  the  transfer."  Referring  to  the  contention  that  if  the  transfer 
agent  improjierly  cancelled  a  certificate  and  issued  a  new  one  the  share- 
holder whose  stock  was  illegally  transferred  could  compel  the  transfer 
."gent  to  reissue  to  him  the  shares  illegally  taken  from  him.  thus  jiroduc- 
ing  an  over-issue,  he  says: 

"But  the  answer  to  this  is  that  the  transfer  agent,  if  comjicUed  to 
make  good  in  such  a  way.  would  go  into  the  market  and  buy  the  necessary 
shares  and  cancel  them  in  order  to  make  the  required   issue  to  the  ag- 


428  TRUST   CO:\rPANIES. 

grieved  stoekholder.  He  could  not  issue  them  out  of  hand.  It  is  quite 
inconceivable  that  there  should  be  at  any  instant  more  stock  outstanding 
than  the  corporation  had  authorized,  the  proper  hypothesis  being  that  the 
transfer  agent  (assuming  that  his  guilt  has  been  proved)  is  'short/  just 
exactly  like  a  speculator  who  has  sold  what  he  does  not  own,  and  is  put 
to  the  necessity  of  buying  the  wherewithal  to  fulfill  his  obligations.  There 
would  be  no  over-issue  at  any  stage  of  the  proceedings,  and  therefore 
nothing  for  the  registrar  to  concern  himself  about." 

Again,  he  says: 

"Moreover,  on  examination  of  the  details  of  the  procedure  it  will  be 
found  that  the  registrar  has  not  the  facilities  for  proving  tlie  jiropriety 
of  the  assignments.  When  a  new  stock  certificate  is  delivered,  the  trans- 
fer agent  takes  the  receipt,  which  in  many  cases  is  the  only  specimen 
on  file  of  the  new  stockholder's  signature.  To  this  the  transfer  agent 
can  refer  by  way  of  added  verification  of  that  signature  when  in  the 
course  of  time  the  certificate  is  presented  for  transfer;  but  the  registrar 
has  not  access  to  it.  Powers  of  attorney,  probate  certificates,  copies  of 
deeds  of  trust,  and  other  papers  showing  the  authority  of  various  persons 
to  execute  assignments  of  stock,  are  lodged  with  the  transfer  agent;  and 
to  suppose  that  the  registrar  must  keep  a  duplicate  file,  or  must  examine 
the  papers  already  accepted  by  the  transfer  agent,  and  require  a  second 
examination  by  coimsel  of  the  doubtful  cases,  is  quite  absurd." 

Mr.  King  objects  to  the  phrase  "Countersigned  and  registered"  on 
certificates,  "because  the  word  'countersigned'  is  likely  to  imply  something 
in  addition  to  'registered.'  " 

The  remedies  proposed  by  those  who  think  the  situation  serious  enough 
to  justify  caution  are  practically  the  same  as  those  already  explained  for 
the  protection  of  companies  acting  as  transfer  agents.  Even  those  who 
hold  to  the  opinion  of  limited  liability  agree  that  it  is  important  to  ex- 
ercise great  care  in  the  form  of  the  Registrar's  certificate.  The  Commit- 
tee of  the  Trust  Company  Section,  American  Bankers'  Association,  al- 
ready mentioned,  recommends '^'^  either  of  the  following  forms: 

"Registered  this day  of 

Trust  Companj',  as   Registry  Agent." 

"Registered  this day  of 

Trust  Company,  as  Registration  Agent." 

The  duties  and  liabilities  of  trust  companies  as  registrars  of  stock  are 
more  fully  discussed  in  the  list  of  articles  given  in  the  note  to  the  heading, 
"Liabilities  as  Transfer  Agents." 


Trustee  Under  B 


GNU  Issues. 


When  one  wishes  to  borrow  upon  mortgage  security  a  compara- 
tively small  amount,  such  as  he  may  obtain  from  a  single  lender,  the 
loan   may   be   negotiated  upon   a    single   note   and   mortgage.      If,   how- 

S7  Proceedings    Trust    Company    Section  1905,   p.   7. 


DITIKS  AND  I.IA15JL1TIKS  Ol    TRIST  (O.MPANIKS.     V29 

ever,  a  corporation  wishes  to  borrow  a  suiii  ruiuiiiig  into  hundreds  of 
thousands  or  millions  of  dollars,  it  uuist  look  to  a  number  of  ditf'erent 
investors  to  furnish  the  money,  and  must  su|>ply  a  corresponding  num- 
ber of  notes  or  evidences  of  indebtedness,  each  of  which  nuist  be  secured 
by  mortgage.  It  is  manifestly  impracticable  to  furnish  each  investor 
with  a  separate  mortgage;  and  hence  there  has  grown  up  the  custom  of 
issuing  a  single  mortgage  securing  a  number  of  sejjarate  notes  or  bonds, 
of  amounts  (usually  .^^lOOO  or  $:>()0)  which  are  within  the  reach  of  the 
average  investor.  Jt  then  becomes  necessary  to  select  some  one  person  or 
corporation  to  whom,  as  trustee,  the  mortgage  may  run  in  trust  for  the 
several  bondholders,  and  who  may  identify  the  bonds  issued  upon  the 
secnritv  ot  such  mortgage.  For  these  trusteeships  the  trust  company  has 
manifold  qualitications,  and  has  come  to  be  generally  used.  What  are  its 
duties  and  liabilities  when  acting  in  this  capacity .- 

In  Ihe  simplest  case  of  such  a  trusteeship,  if  the  issuing  corporation 
meets  its  obligations  promptly  and  regularly,  the  duties  of  the  trustee 
may  be  no  more  than  the  holding  of  the  mortgage  as  trustee,  the  certifi- 
cation of  the  bonds,  and,  at  maturity,  the  satisfaction  of  the  mortgage 
and  cancellation  of  the  bonds.  In  many  cases,  however,  the  duties  of 
the  trustee  at  the  outset  and  during  the  life  of  the  bonds  are  more  exten- 
sive, while  in  any  case  the  failure  of  the  issuing  corporation  to  comply 
with  the  terms  of  the  nsortgage  will  impose  added  burdens  upon  the 
trustee. 

When  the  trust  has  been  accepted  the  mortgage  conveying  title  to  the 
trustee  in  trust  for  the  holders  of  the  bonds  is  recorded,  the  seal  of  the 
•corjjoralion  and  the  sign/itures  of  its  proper  officers  are  placed  upon  the 
bonds,  and  the  latter  are  d<'livercd  to  the  trustee  for  certification.  Before 
the  mortgage  is  executed  or  the  bonds  engr;ived  both  documents  should 
be  submitted  to  the  trustee  for  examination  and  approval  by  its  attor- 
ney. He  should  see  to  it  that  the  d«\scriptions  of  the  i)roj)erty  to  be 
mortgaged  are  definite  and  plain,  and  that  the  duties,  limitations  and 
liabilities  of  the  trustee  are  set  forth  in  the  mortgage  clearly  and  fully. 
Upon  receipt  of  the  l)onds  tlie  trustee  examines  each  bond  with  care  to 
see  that  all  arc  in  comph  te  condition,  properly  signed  and  sealed,  that 
the  nmnber  of  the  bonds  is  correct  and  that  their  wording  is  according 
to  the  form  which  should  l)e  gi\cn  in  full  in  the  mortgage.  Having 
•satisfied  itself  of  these  things,  the  trustee  has  its  secretary  sign  the 
trustee's  certificate  on  each  bond,  and  is  then  ready  to  deliver  the  bonds 
according  to  the  ))rovisions  of  the  mortgage. 

The  conditions  to  be  inserted  in  the  mortgage  for  the  definilitm  of 
the  trustee's  liability  demand  careful  thought.  The  following  are  sug- 
gested by  a  Conunittee  of  the  Trust  romjiany  Section.  .Vmerican  Hank- 
ers' Association,"**  and  will  bo  found  very  useful  as  guides: 

"As  a  condition  jirecedent  to  the  acceptance  of  the  said  trust  by  the 
trustee   it    is    further  slipidated   and   agreed   by   and   between   the   parties 


SS  rroooedlngs    Trust    Company    Section  i;>05.   pp.   7-!*. 


430  TKUST   COMPANIES. 

hereto  and  all  present  or  future  liolders  of  bonds  seeiircd  by  these  pres- 
ents, that  the  trustee  shall  not  be  answerable  for  any  act,  default,  neglect 
or  misconduct  of  any  of  its  agents,  representatives  or  employees,  by  it 
appointed  or  employed  in  connection  with  the  execution  of  any  of  the 
said  trusts,  nor  in  any  other  manner  answerable  or  accountable  under  any 
circumstances  whatsoever,  except  for  gross  negligence  or  bad  faith;  that 
the  recitals  contained  herein,  or  in  the  bonds,  as  to  priority  of  lien,  due 
authorization  or  any  other  mutter  whatsoever,  are  made  by  and  on  the 
part  of  the  company,  and  the  trustee  assumes  no  responsibility  for  the 
correctness  of  the  same;  also,  that  it  shall  be  no  part  of  the  duty  of  the 
trustee  to  file  or  record  tliis  indenture,  mortgage,  deed  of  trust,  assign- 
ment or  other  instrument  whatsoever  that  may  be  delivered  to  it  under  the 
terms  of  tliis  instrument  as  a  mortgage,  deed  of  trust  or  conveyance  of 
real  estate,  or  as  a  chattel  mortgage  or  conveyance  of  personal  property, 
or  to  renew  such  deed  of  trust  or  mortgage,  real  or  personal,  or  to  pro- 
cure any  further,  other  or  additional  instrument  of  further  assurance,  or 
to  do  any  other  act  which  may  be  suitable  and  proper  to  be  done  for 
the  continuance  of  the  lien  or  charge  hereof,  or  for  giving  notice  of  the 
existence  of  such  lien  or  charge,  or  for  extending  or  supplementing  the 
same;  nor  shall  it  be  any  part  of  its  dut}'  to  effect  insurance  against  fire 
or  other  damage  on  any  portion  of  the  premises  or  property  hereby  mort- 
gaged, or  to  renew  anv  policies  of  insurance,  or  to  keep  itself  informed 
as  to  the  payment  of  any  taxes  or  assessments,  or  to  require  such  pay- 
ment to  be  made;  but  the  trustee  may  do  any  or  all  of  these  things. 

The  trustee  shall  not  be  compelled  to  take  any  action  as  trustee  under 
this  mortgage  unless  first  properly  indemnified  to  its  full  satisfaction^ 
nor  shall  it  be  chargeable  with  notice  of  any  default  on  the  part  of  the 
coraiJany  except  upoii  delivery  to  it  of  a  distinct  specification  in  Avriting 
of  such  default  by  some  person  or  persons  interested  in  the  trust,  whose 
interest,  if  the  trustee  shall  require,  must  be  proved  to  the  reasonable  sat- 
isfaction of  the  trustee. 

In  case  at  any  time  it  sliall  be  necessary  and  proper  for  the  trustee 
to  make  any  investigation  respecting  any  fact  or  facts  preparatory  to 
taking  or  refraining  from  taking  any  action,  or  doing  or  not  doing  any- 
thing, as  such  trustee,  the  certificate  of  the  company  under  its  corporate 
seal,  attested  by  the  signature  of  its  president  or  secretary,  or  the  affi- 
davit of  one  or  more  directors,  shall  be  conclusive  evidence  of  such  facts 
to  protect  the  trustee  in  any  action  or  position  that  it  may  take  or  assume 
by  reason  of  the  supjjosed  existence  of  such  facts. 

It  is  further  covenanted  and  agreed  that  the  trustee  under  this  deed 
of  trust  is,  and  shall  be,  entitled  to  reasonable  compensation  for  all  ser- 
vices rendered  liereinunder,  or  in  connection  with  the  trust,  which  com- 
pensation, together  with  any  and  all  necessary  and  reasonable  expenses, 
charges,  counsel  fees  and  other  disbursements  incurred  by  the  trustee 
in  the  discharge  of  his  duties  as  such,  shall  be  paid  by  the  company  or  out 
of  the  trust  estate  upon  which  they  are  hereby  made  a  lien  and  charge 
superior  and  prior  to  those  of  the  bonds  secured  hereby. 

The  trustee  shall  be  protected  in  acting  upon  any  resolution,  notice, 
request,  consent,  certificate,  affidavit,  voucher,  bond  or  other  paper  or  doc- 
ument believed  by  it  to  be  genuine  and  to  have  been  passed  or  signed  by 
the  proper  party. 


DUTIES  AND  I.IAHII.ITIES  OF  TRUST  COMPANIES.    4.51 

Every  trustee  licreunder  may  at  any  time  resign  from  the  trust  by 
mailing,  at  least  sixty  days  before  such  resignation  shall  take  effect,  a 
duly  addressed  notice  in  writing  to  that  effect  to  the  company,  and  to  all 
bondholders  Avho  may  he  known  to  the  trustee  to  be  such,  and  whose  ad- 
dresses shall  likewise  be  knoM-n  to  it." 

The  form  of  the  trustee's  certificate  should  likewise  be  worded  with 
care  to  avoid  the  incidental  assumption  of  responsibility  which  the  trus- 
tee does  not  intend  to  assume.  For  example,  it  has  been  held  that  the 
statement  in  the  certificate  that  the  bond  is  "secured"  by  the  mortgage 
therein  referred  to  may  commit  the  trustee  to  a  guaranty  that  the  bond 
actually  is  secured.  The  committee  already  referred  to  suggests  the  fol- 
lowing form  for  the  trustee's  certificate: 

"It  is  hereby  certified  that  this  bond  is  one  of  the  series  of  bonds 
mentioned  and  described  in  the  mortgage  or  deed  of  trust  herein  re- 
ferred to. 

Trust  Company,  as  Trustee, 

By  Secretary." 

The  pro\isions  for  the  delivery  of  the  bonds  after  certification  vary 
greatly.  Sometimes  all  of  the  bonds  are  to  be  delivered  to  the  issuing 
corporation  at  once  upon  the  recording  of  the  mortgage;  often  some  of 
them  are  to  be  withheld  to  take  care  of  underlying  bonds,  or,  as  in  the 
case  of  a  railroad  construction  mortgage,  the  bonds  are  to  be  delivered  in 
installments  as  the  work  progresses.  Occasionally  the  entire  issue  is  to 
be  held  in  the  custody  of  the  trustee  until  the  completion  of  certain  work, 
or  the  fulfillment  of  certain  conditions.  \A'hen  any  conditions  are  at- 
tached to  the  delivery  of  the  bonds,  the  mortgage  should  be  absolutely 
clear  as  to  the  conditions,  and  should  specify  the  evidence  to  be  required 
that  such  conditions  have  been  fulfilled.  The  responsibility  of  the  evi- 
dence is  ordinarily  put  upon  the  issuing  corporation,  the  trustee  being 
liable  only  for  the  exercise  of  good  faith. 

After  delivery  of  the  bonds  the  trustee  may  be  called  upon  to  perform 
\arious  duties,  dejjending  upon  the  terms  of  the  mortgage  and  the  char- 
acter of  the  property.  If  provision  is  made  for  the  accumulation  of  a 
sinking  fund,  the  trustee  may  liave  divers  duties  in  that  connection.  The 
trustee's  ])owcrs  may  include  that  of  releasing  portions  of  the  property 
from  the  lien  of  the  mortgage.  In  the  case  of  collateral  trust  bonds — 
which  are  practically  long-time  collateral  notes — the  mortgaged  property 
consists  of  bonds  and  stocks,  and  the  trustee  may  be  called  up  to  pass 
upon  securities  offered  in  substitution.  Outside  of  its  regular  duties  as 
trustee,  the  trust  company  may  perform  various  services  as  fiscal  agent. 

The  management  of  a  sinking  fund  involves  varying  degrees  of  re- 
sponsibility. Often  the  funds  received  are  to  be  used  for  the  retirt  inent 
of  a  certain  number  of  the  outstanding  bonds  each  year,  according  to  the 
provisions  containetl  in  the  mortirage  which  secures  the  bonds.  Some- 
times the  particular  bonds  to  be  retired  are  selected  by  lot.  and  the 
result   is   advertised    in   the   daily   ])apers.      Whether   they   are   presented 


432  TRUST   COMPANIES. 

for  redemption  or  not,  they  cease  to  draw  interest  at  the  period  adver- 
tised. The  bonds  thus  redeemed  are  often  not  cancelled,  but  are  held 
by  the  trustee  under  the  mortgage,  and  interest  on  them  is  added  to  the 
sinking  fund  for  the  further  purchase  of  bonds.  In  the  absence  of 
provision  for  the  retirement  of  bonds  as  above  stated,  they  are  somer' 
times  to  be  purchased  in  the  open  market  from  the  sinking  fund.  Occa- 
sionally the  sinking  fund  is  to  be  invested  in  other  securities,  either 
according  to  stipulated  conditions  or  at  the  discretion  of  the  trustee  or 
tlie  directors  of  the  corporation. 

In  case  of  default  by  tlie  issuing  corporation  the  trustee  may  find  it 
necessary  to  foreclose  the  mortgage  and  sell  the  property.  Not  infre- 
quently various  interests  among  the  bondholders  institute  proceedings 
which  of  necessity  involve  the  trustee  and  add  to  its  duties;  and  in  any 
case  the  trustee  is  obligated,  within  the  limits  which  should  be  carefully 
laid  down  in  the  mortgage,  to  protect  the  interests  of  all  bondholders 
alike.  If  a  receiver  for  the  corporation  is  appointed,  and  application 
made  for  the  issue  of  receiver's  certificates  to  be  prior  in  lien  to  the  bonds, 
the  trustee  for  those  bonds  should,  through  its  attorney,  appear  in  court 
and  look  after  the  interests  of  the  bondholders,  either  favoring  or  oppos- 
ing the  issue  of  receivers'  certificates  as  the  welfare  of  the  holders  of 
the  bonds  may  dictate.  For  all  special  services  the  trustee  is  of  course 
entitled  to  reasonable  compensation,  the  fees  agreed  upon  at  the  start 
covering  only  the  routine  duties,  of  which  the  chief  is  the  certification 
of  the  bonds. 

Regarding  the  liability  incurred  in  the  certification  of  bonds  there 
are  some  differences  of  opinion,  which  concern  chiefly  the  moral  rather 
than  the  legal  responsibility  of  the  trustee.  So  far  as  the  trustee  is  con- 
cerned the  certification  is  intended  for  no  more  than  the  identification 
of  the  bonds  as  being  the  particular  bonds  referred  to  in  the  mortgage  or 
deed  of  trust  to  which  reference  is  made  in  said  bonds.  The  trustee  does 
not  undertake  to  guarantee  an3^thing  regarding  the  value  of  the  property 
alleged  to  be  behind  the  issue,  regarding  the  title  to  the  property,  or 
regarding  the  regularity  of  issue,  validity  or  priority  of  lien  of  the 
mortgage.  It  merely  certifies  that  it  has  in  its  possession  as  trustee  a 
mortgage  issued  by  the  corporation  whose  name  appears  therein,  that  the 
bond' upon  which  its  certificate  appears  is  genuine,  is  one  of  the  bonds  re- 
ferred to  in  the  mortgage,  and  that  the  number  of  such  bonds  certified 
by  it  is  not  greater  than  the  number  called  for  in  the  mortgage.  In  other 
words,  the  certificate  intends  only  to  identify  the  bonds  and  to  prevent 
an  overissue  of  them. 

Notwithstanding  this  very  limited  legal  liability  undertaken  by  the 
trustee,  the  company  which  accepts  such  trusts  without  a  reasonably  care- 
ful investigation  runs  the  risk  of  having  its  reputation,  and  incidentally 
its  business,  seriously  injured;  and  most  comioanies  recognize  that  their 
moral  responsibility  to  the  public  requires  care  lest  their  names  be  al- 
lowed to  appear  in  any  connection  with  enteiqjrises  regarding  the  legit- 
imacy and  good  faith  of  which  there  appears  to  be  any  question.     There 


DUTIES  AND  LIABILITIKS  OF  TRCST  COMPANIES.     433 

is  of  course  no  oblijfation  on  tlie  i)art  of  the  trustee  to  feel  assured  that 
the  enterprise  will  he  successful;  that  is  a  risk  which  the  investor  must 
take  for  himself,  and  besides,  it  may  well  be  that  enterprises  which  do 
not  look  promisinpf  to  the  trustee  may  meet  with  great  success  and  be 
exceedingly  profitable  to  the  investors.  But  if  an  undertaking  proves  to 
have  been  from  its  very  incej)tion  a  "fake,"  the  trust  comjiany  whose  name 
appears  upon  the  bonds  as  trustee  is  very  certain  to  suffer  in  public  esti- 
mation, no  matter  how  innocent  of  wrong  intention  it  may  have  been. 

The  degree  of  care  exercised  and  the  particular  matters  investigated 
before  accepting  an  appointment  of  this  kind  of  course  vary  with  dif- 
ferent companies.  Some  do  no  more  than  satisfy  themselves  that  the 
undertaking  is  legitimate  and  that  the  men  behind  it  are  acting  in  good 
faith.  They  argue  that  for  the  meagre  comjjensation  received  they  can 
afl'ord  to  do  no  more,  that  they  are  living  up  to  the  full  measure  of  their 
contract;  and  further,  that  their  doing  more  would  tend  to  mislead  the 
public.  Those  who  go  to  the  other  extreme  take  pains  to  verify  the  cor- 
rectness of  everything  leading  up  to  the  bond  issue,  though  not  admitting 
legal  responsibility  for  such  verification.  They  satisfy  themselves  that 
the  issuing  corporation  actually  owns  jiroperty  which  may  b«  mortgaged 
(but  do  not  attempt  to  pass  upon  the  value  of  such  property)  ;  that  the 
title  to  the  projjerty  is  good ;  that  the  company  has  been  properly  incor- 
porated and  that  its  acts  le;uling  up  to  the  l)ond  issue  have  been  legal; 
that  the  mortgage  is  properly  drawn,  contains  no  glaring  faults  and  actu- 
ally covers  the  property  which  it  purports  to  mortgage.  If  it  is  stated  in 
the  bonds  that  the  mortgage  is  a  first  mortgage,  they  take  pains  to  ascer- 
tain that  such  is  the  fact.  An  instance  of  extreme  care  in  this  matter 
is  found  in  the  following  list  of  papers  required,  prepared  by  Frederick 
Vierling,  Trust  Officer  of  The  Mississippi  Valley  Trust  Co.,  St.  I/)uis, 
fir  the  guidance  of  his  com})any: 

"List  of  papers  to  be  furnished  Trustee  in  re  Bonds  to  be  issued; 
all  jjapers  to  be  certified  under  seal  of  Company.  Copies  of  official  docu- 
ments need  not  be  certified  by  State  officials,  if  Company  certifies  under 
seal  that  same  are  true  copies  of  official  documents  and  certificates 
thereto. 

1.  Articles  of  Association. 

2.  Certificate  of  Incorporation. 

3.  All  amendments  to  either  of  above,  and  minutes  and  documents 
in  re  changes  of  capital  stock,  or,  if  there  have  been  no  amenduients, 
certificate  to  that  effect. 

4.  By-laws  of  Company. 

o.  Minutes  of  stockholders  electiui;  jiresent  directors,  with  all  »>x- 
liibits.     Attach  certified  list  of  stockholders  with  numlx'r  of  shares  each. 

6.  Minutes   of   directors    electing   present    officers,   with   all    exhibits. 

7,  Certificate  containing  specimen  signatures  of  officers  who  will 
sign  mortgage,  bonds  and  coupons. 


434  TRUST   COMPANIES. 

8.   ^Minutes  of  stockholders  authorizing  mortgage,  bonds  and  coupons, 
with  all   exhibits. 

9.  Minutes  of  directors  approving  action  of  stockholders  in  author- 
izing mortgage  and  bonds,  with  all  exhibits  attached. 

10.  Opinion  of  attorney  of  Company  as  to  its  legal  incorporation 
and  existence  and  that  proceedings  authorizing  mortgage,  etc.,  were  duly 
had  according  to  law,  also  that  form  of  mortgage,  bonds  and  coupons 
are  valid .  in  form  and  when  duly  executed  will  be  legal  and  binding 
obligations  of  Company. 

11.  Certificate  of  title  of  regular  abstractors  showing  that  mortgage 
has  been  duly  filed  for  record  and  is  first  lien  on  all  property;  or  in  lieu, 
an  abstract  of  title  with  opinion  of  attorne}'  based  thereon  to  like 
eitect. 

12.  Afhdavit  of  President  and  two  Directors  of  Company  showing 
that  property  mortgaged  at  fair  and-  reasonable  value  is  at  least  as 
much  as  amount  of  bonds  forthwith  to  be  issued. 

13.  General  inventory  of  tangible  and  intangible  property,  each 
separate. 

14.  Financial  statement  of  Company,  showing  assets  and  liabilities. 
Also,  statement  of  earnings  and  expenses  per  year  for  past  five  years. 

15.  Agreement  of  Company  at  least  annually  on  demand  of  trustee 
hereafter  to  send  statement  as  in  No.  14  and  to  furnish  additional 
inventories,  as  in  No.   13   on  demand  of  trustee. 

16.  If  principal  owners  of  Company  are  not  known  to  trustee,  let- 
ters from  responsible  persons  who  are  known,  identifying  o\vners. 

17.  Letter  from  banker  of  Companj^  as  to  its  reputation  for  financial 
responsibility,  etc. 

18.  Certificate  showing  fact  that  each  bond  signed  by  officers  of  com- 
pany and  the  seal  attached  is  signed  in  genuine  handwriting  of  officers 
purporting  to  have  signed  same  and  that  seal  affixed  is  the  corporate  seal 
of  the  compan}^ 

19.  Copies  of  all  existing  franchises  of  company  with  certificate 
showing  that  all  payments  thereunder  required  have  been  made  and  that 
ether  conditions  thereby  required  of  company  to  be  kept  have  been  per- 
formed. 

20.  If  mortgage  has  no  specific  provisions  for  delivery  of  bonds  by 
trustee  after  authentication,  resolution  of  directors  authorizing  certain 
officer  or  officers  of  company  to  receive  bonds  with  specified  coupons 
and    give    proper    receipt. 

21.  Copy  of  underlying  mortgages  Avith  certificates  as  to  outstand- 
ing bonds  issued  thereander." 

Between  the  extremes  there  are  companies  which  assume  varying 
degrees  of  moral  responsibility.  Those  who  incline  to  put  considerable 
stress  upon  the  matter  of  the  moral  responsibility  point  to  the  fact  that, 
however  unjustified  it  may  be  in  so  doing,  the  public  does  actually  attach 


DUTIES  AND  I.I  AHII.ITIES  OK  TUL'ST  COM  I»AMi:S.     l:ij 

a  great  deal  of  importance  to  the  trustee's  certirioate,  and  that  the  eertiri- 
cate  of  a  reputable  trustee  is  a  prerequisite  to  tlie  satisfactory  financing 
of  a  bond  issue.  It  is  a  frequent  occurrence  for  the  bond  seller  to  clinclj 
his  argument  with  the  statement  that  the  Blank  Trust  Companv,  a  rep- 
utable concern,  is  trustee  for  the  issue.  Some  comj)anies,  in  their  adver- 
tisemcTits  for  this  kind  of  business,  point  to  the  advantages,  other  than 
the  identification  of  the  bonds,  gained  by  their  trusteeship.  For  exam- 
ple, a  large  Eastern  company  says  in  a  circular,  "It  ad<ls  very  largely  to 
the  value  of  bonds  issued  by  any  corporation,  that  the  jiroposcd  pur- 
chaser knows  that  the  trustee  named  in  the  mortgage,  which  secures  the 
payment  of  the  bond  he  intends  to  buy,  is  a  resi)onsiblc  corporation, 
which  bj'fore  assuming  to  act  has  through  its  counsel  investigated  the 
forms  of  the  bond  and  mortgage  and  determined  the  validity  of  the  jiro- 
ceedings  of  the  corjjorafion  which  issued  them.  This  relieves  him  from 
the  necessity  and  expense  of  making  such  an  investigation  himself,  and 
he  is  only  obliged  to  determine  in  regard  to  the  business  value  of  the 
security  itself." 

While  opinions  differ  greatly,  as  already  stated,  tlu"  tendency  appears 
to  be  towards  greater  care  in  accepting  appointments  as  trustee  under 
a  bond  issue.  "In  recent  years  the  trust  conipanies  have  shown  a  tend- 
ency, when  acting  as  mortgage  trustees,  to  recogiiize  a  greater  moral 
responsibility  than  they  at  first  were  willing  to  bear.  *  *  *  A  trust 
company  which  shoidd  now  allow  the  issue  of  unsecured  bonds  because 
of  some  glaring  defect  in  the  language  of  the  mortgage,  would  no  longer 
be  morally  excused  by  financial  opinion,  though  perhaps  held  t(  eliiiically 
innocent."®" 

It  would  seem  to  be  to  the  interest  of  all  concerned  that  the  trustee's 
con?pensation  be  made  large  enough  to  enable  it,  not  to  guarantee  the 
validity  of  the  mortgage,  but  to  be  responsible  for  ordinary  care  in  ascer- 
taining that  the  mortgage  has  been  regularly  issued  by  a  properly  incor- 
porated cempany,  is  a  lien  on  ])roperty  to  which  that  company  holds 
clear  title,  and  contains  reasonable  provisions  for  the  jirotection  of  Inind- 
holders — in  short,  perform  for  the  bondholders  the  services  which  the 
careful  investor  might  expect  of  his  lawyer,  leaving  to  the  bondholders 
the  risk  as  to  the  business  success  of  the  undertaking,  together,  of  course, 
with  the  risk  of  legal  defects  in  the  instruments  which  ordinary  care  on 
the  part  of  the  trustee  has  not  d«  tected.  Such  a  course  would  not  only  be 
a  protection  to  the  investor,  but  would  add  more  than  its  cost  to  the  value 
of  the  bonds,  and  would  compensate  the  trustee  for  the  taking  of  a  moral 
risk  for  wliieh  under  jiresent  conditions  it  certainly  is  not  paid,  but  the 
takinir  ;)f  wliieh   manv   think  it  cannot  wholly  avoid. "'^ 


so  Thomas    L.    Greene,    "Corporation    Flmir.oe,"   pp.   59,   60. 

00  For    detailed    discussions    of    this    subject,    see 

rroceedings  Tru.<5t  Company  Section  1896-1003.  pp.  17-25,  Paper  by  Francis  S. 
Batips;  pp.   4-J-46.   Paper  hy  William  A.  Carr;  pp.   221-22T.   Paper  by  Andrew  Squire. 

Proceedings  Trust  Company  Section  1904  pp.  T3-SS,  passim.  Discussion  of  topic 
"Fees  for   Trust    Company   Work." 


436  TRUST  COMPANIES. 

The  Payment  of  Coupons. 

As  agent  for  tlie  payment  of  coupons,  either  in  connection  with  a  bond 
trusteeship  or  independently  thereof,  the  trust  company  receives  in  ad- 
vance a  remittance  equal  to  the  total  amount  of  the  coupons  due  and 
payable  at  the  next  interest  period.  At  and  after  maturity  it  pays  the 
coupons  as  presented,  preferably  by  check,  tliough  they  are  paid  in  cash 
when  necessary. 

Althougli  coupons  are  payable  to  bearer,  record  is  made  of  the  names 
of  the  persons  who  present  them  at  tlie  counter,  and  of  the  names  of  the 
banks  who  present  them  through  the  clearing-house.  Separate  accounts 
are  kept  of  the  coupons  of  each  interest  period,  and  a  record  is  kept  of 
the  numbers  of  the  bonds  from  which  the  coupons  are  cut.  The  paid 
coupons  are  cancelled  by  the  punching  of  holes  in  them,  and  are  filed 
away  b}'  bond  numbers.  At  stated  intervals— sometimes  once  a  month — 
these  cancelled  coupons  are  returned  to  the  issuing  corporation,  which 
receipts  for  them.  Statements  of  the  accounts  are  sent  at  suitable  inter- 
vals. Often  the  coupons  are  payable  at  the  office  of  the  trustee  of  the 
bond  issue  and  also  at  the  office  of  a  fiscal  agency  in  New  York,  Chicago 
or  other  large  center.  Ordinarily  the  duties  and  liabilities  are  clearly 
defined,  but  the  default  of  the  issuing  corporation  may  involve  the  trus- 
tee in  perplexing  problems.  One  of  these,  which  is  as  yet  not  fully  de- 
cided by  the  courts,  is  whether  funds  remitted  for  the  payment  of  cou- 
pons are  to  be  considered  a  trust  fund  for  the  coupon  holders,  or  as  a 
part  of  the  general  assets  of  the  corporation.  The  question  does  not, 
of  course,  affect  coupon  funds  derived  from  particular  sources  whose 
revenues  have  been  set  aside  for  the  payment  of  coupons.  Other  prob- 
lems which  may  arise  are  the  question  of  priority  between  coupons  and 
principal  when  a  mortgage  is  foreclosed,  the  question  as  to  whether  de- 
faulted coupons  should  bear  interest,  and  the  question  of  missing  coupons 
when  the  corporation  wishes  to  have  the  mortgage  discharged. 

The  work  of  paying  interest  on  registered  bonds  differs  from  that  of 
paying  coupons  chiefly  in  that  the  interest  is  remitted  to  the  security 
holders  instead  of  being  held  subject  to  their  call.  The  fiscal  agent  is 
supplied  with  the  necessary  funds,  and,  unless  it  is  itself  the  registrar  of 
the  bonds,  with  a,  list  of  the  registered  bondholders,  their  holdings  and 
addresses.  A  check  for  the  amount  of  his  interest  is  mailed  to  each  reg- 
istered bondholder. 

Trust  companies  act  in  a  number  of  other  capacities  as  fiscal  agent 
for  corporations,  either  receiving  or  disbursing  funds,  or  both.  The 
exact  duties  involved  are  of  course  as  varied  as  the  kinds  of  agency,  but 
are  usually  pretty  well  defined  by  the  contracts;  while  the  liabilities  are 
determined  bv  the  ordinarv  laws  of  agencv. 


Proceedings  Trust  Company  Section  1905,  pp.  7-9.  Report  of  Executive  Com- 
mittee. 

"Trust    Companies"    magazine,    "Vol.    I,    pp.   279-282,   article  by  "William  J.   Field. 

"Trust  Companies"  magazine.  Vol.  II.  pp.  634-635,  article  by  John  H.  Connellan. 

The  "Banking  Law  Journal,"  Vol.  XXI,  p.  841,  Decision  New  York  Supreme 
Court. 


DUTIES  AND  LIABILITIES  OF  TRUST  COMPANIES.     i:r. 


Ill  its  siiiiphst  and  most  coninion  form  an  escrow  is  a  drid  placid  bv 
tlic  grantor  in  the  hands  of  a  third  party,  to  be  delivered  to  the  grantee 
upon  tlie  fulfillment  by  the  latter  of  certain  specified  conditions.  Instru- 
ments other  than  deeds  may  be  j)laeed  in  escrow;  as,  for  example,  a  mort- 
gage or  a  note,  but  it  must  be  an  obligatory  instrument  or  an  instrument 
under  seal.  In  addition  to  escrows  in  the  strict  legal  sense,  however, 
trust  companies  are  often  made  depositaries  of  various  things  of  value 
which  are  to  be  held  for  delivery  under  conditions  such  that  they  may  be 
considered  informal  kinds  of  escrows. 

To  be  strictly  an  escrow  the  delivery  of  the  instrument  by  the  grantor 
to  the  third  party  must  be  absolute,  beyond  power  of  recall,  and  its  deliv- 
ery to  the  grantee  conditioned  only  upon  the  performance  by  him  of  his 
part  of  the  contract.  Having  performed  the  conditions,  the  grantee  may 
if  necessary  compel  the  delivery  of  the  instrument;  and  the  death  of  either 
party  will  not  void  the  contract  or  prevent  delivery.  In  fact,  it  is  held 
that  an  escrow,  upon  performance  of  the  conditions,  becomes  an  absolute 
conveyance  or  grant  even  if  the  instrument  itself  is  not  delivered  by  the 
holder.  Hence  if  A  leaves  with  a  trust  comi)any  a  deed  with  instruc- 
tions that  it  is  to  be  held  and  later  to  be  turned  over  to  B  u]>on  A's  order, 
the  instrument  is  not  an  escrow,  for  its  delivery  is  not  dependent  upon 
conditions  to  l)e  fulfilled  by  B,  and  the  company  is  not  acting  as  the 
holder  of  an  escrow,  but  merely  as  the  agent  of  A. 

The  duty  of  the  holder  of  an  escrow  is  to  deliver  the  instruuKnt  to 
the  grantee  upon  his  performance  of  his  part  of  the  contract,  or  to 
withhold  the  instrument  if  the  contract  be  not  fulfilled;  the  one  obligation 
being  as  important  as  the  other.  The  holder's  liability  is  measured  by 
the  degree  of  his  faithfulness  to  such  duty.  If  he  wrongfully  deliver 
the  instrument  when  the  conditions  are  unfulfilled,  he  may  be  liable  to 
the  grantor;  while  upon  fulfillment  of  the  conditions,  the  grantee  may 
compel  delivery.  It  is  evident,  therefore,  that  a  trust  company  in  under- 
taking the  holding  of  an  escrow*  should  be  sure  that  the  contract  is  clear 
and  definite  and  is  thoroughly  imderstood  by  both  parties.  While  an  oral 
contract  may  in  some  cases  lie  leijal,  the  only  safe  rule  is  to  have  the  eon- 
tract  in  writing  and  signed  by  both  parties.  Particular  care  should  be 
taken  by  the  trust  com]>any  to  avoid  accepting  an  escrow  whose  condi- 
tions are  so  vague  that  (juestion  may  arise  as  to  whether  they  have  been 
fulfilled,  putting  the  holder  in  the  position  of  an  arbiter  of  a  question 
whose  decision  might  be  a  matter  of  doubt.  The  holder  might  then  find 
himself  in  a  very  unenviable  position,  liable  to  prosecution  by  either 
party;  or,  if  not  legally  liable,  at  least  incurring  the  ill-will  of  one  or 
both  of  the  parties. 

Detositahy  Un'oer  Pi.axs  of  Reoroamzatiox. 

A  common  function  of  trust  companies,  especially  in  the  larger  cities, 
is  that  of  acting  as  depositary  of  securities  when  u  corporation  is  to  be 


438  TRUST   COMPANIES. 

reorganized  or  when  two  or  more  corporations  are  to  be  consolidated — the 
procedure  being  practically  the  same  in  the  two  cases.  Here  the  depos- 
itary is  practically  the  holder  of  escrows.  In  the  case  of  a  reorganiza- 
tion, the  reorganization  committee  details  in  writing  the  plan  proposed, 
and  the  security  holder,  by  the  act  of  depositing  his  securities,  enters 
into  the  contract.  Upon  receipt  of  the  securities  the  depositary  issues 
temporary  receipts,  which  are  later  replaced  by  engraved  and  negotiable 
certificates  of  deposit,  after  the  depositary  has  had  time  to  examine  the 
securities  to  make  sure  that  they  are  genuine  and  are  "good  deliveries." 
The  exact  wording  of  the  certificates  varies  according  to  the  conditions, 
but  there  is  an  exact  description  of  the  documents  deposited,  a  reference 
to  the  agreement  under  which  the  deposit  is  made,  a  statement  that  the 
depositor  assents  to  the  agreement  and  that  the  depositary  holds  the 
securities  subject  to  the  provisions  of  such  agreement.  Each  lot  of  securi- 
ties as  deposited  is  given  an  accession  number  corresponding  to  the  num- 
ber of  the  temporary  receipt,  and  is  filed  away  to  await  the  progress  of 
the  reorganization.  Whenever  assessments  are  to  be  paid  by  or  distri- 
butions are  to  be  made  to  the  depositors,  the  certificates  are  presented  and 
endorsements  of  the  transactions  are  made  thereon.  After  the  reorgan- 
ization is  complete  and  the  new  securities  are  engraved  and  ready  for 
delivery,  the  depositors  bring  in  their  certificates  of  deposit  and  receive 
their  proper  share  of  the  new  securities. 

EXECTITOR   OR   ADMINISTRATOR. 

The  duties  and  liabilities  of  a  trust  company  as  the  executor  or  the 
administrator  of  an  estate  do  not  differ  in  any  wise  from  those  of 
an  individual  acting  in  like  capacity,  and  are  quite  definitely  fixed 
by  law.  The  employment  of  the  trust  company  for  such  services  is 
steadily  increasing,  and  will  increase  more  rapidly  as  the  public  be- 
comes educated  to  the  very  superior  qualifications  of  the  trust  company 
for  this  work. 

An  executor  is  a  person  or  corporation  appointed  by  the  will  of  a 
decedent  to  carry  out  the  provisions  of  such  will;  and  his  duties  are 
in  general  to  secure  and  preserve  the  assets  of  the  decedent,  to  protect 
and  pay  creditors  and  to  distribute  the  balance  of  the  property  as  the 
will  provides  or  the  law  dictates.  The  office  is  a  sacred  one,  the  executor 
standing  as  the  representative  of  the  deceased  and  the  agent  of  the  liv- 
ing— the  creditors  and  the  heirs.  There  is  a  personal  element  in  the 
office  which  even  a  corporation  cannot  and  ought  not  to  overlook. 

Appointments  of  trust  companies  as  executors  come  most  often  from 
among  those  who  have  during  their  lives  been  customers  in  one  or  more 
of  the  de})artments,  though  others  often  make  such  appointments.  The 
services  of  the  company's  attorney  are  usually  offered  without  charge 
for  the  drawing  of  wills  in  which  the  company  is  named  as  executor,  and 
the  comjiany  takes  charge  of  such  wills  also  without  charge.  Upon  the 
death  of  the  testator,  the  first  step  is  the  probating  of  the  will.      The 


DUTIES  AND  LIABILITIES  OF  TRL'ST  COMPANIES.    439 

court  appointed  by  law  to  receive  wills  and  have  jurisdiction  over  the 
estates  of  the  deceased  is  known  in  various  states  as  the  Probate  Court, 
the  Surrogate's  Court  and  the  Orphan's  Court.  After  the  probating  of 
the  will,  the  executor  named  therein  qualifies  before  the  court  according 
to  the  state  laM'S,  and  receives  from  the  court  letters  testamentary,  au- 
thorizing him  to  proceed  with  his  duties.  Then  follow  the  gathering 
together  of  the  assets,  the  filing  of  an  inventory,  the  advertising  for 
claims  against  the  estate.  The  allowances  of  the  widow  or  widower  and 
the  minor  children,  if  any,  are  set  aside;  and  if  the  estate  is  solvent,  and 
funds  are  in  hand,  the  preferred  claims,  such  as  expenses  incurred  dur- 
ing the  decedent's  last  illness,  funeral  expenses,  taxes,  etc.,  are  paid.  The 
claims  of  other  creditors  arc  examined,  and  those  which  are  allowed  may 
be  paid  at  once  or  deferred  as  circumstances  dictate;  but  the  executor  is 
of  course  not  protected  in  paying  them  unless  the  estate  is  evidently  sol- 
vent. If  the  estate  appears  insolvent,  the  fact  is  reported  to  the  court, 
and  notice  of  the  probable  insolvency  is  published.  A  part  at  least  of 
the  persona]  property  is  usually  to  be  converted  into  cash  as  soon  as  expe- 
dient. Real  property  may  not  ordinarily  be  sold  unless  the  will  express- 
ly so  provides  or  such  sale  is  necessary  to  pay  debts;  and  in  the  latter 
case  an  order  of  court  is  obtained.  The  executor  renders  statements  to 
the  court  as  circumstances  or  the  law  may  require.  When  his  work  is 
practically  complete  with  the  exception  of  the  final  distribution  of  the 
propel ty,  a  statement  is  rendered  and  an  order  from  the  court  is  obtained 
for  the  distribution  of  the  balance  in  the  hands  of  the  executor.  The 
latter  then  makes  the  distribution,  files  a  final  account  and  is  discharged. 

The  procedure  is  practically  the  same  in  all  the  states,  the  differences 
being  chiefly  in  matters  of  detail.  Sometimes  the  trust  company  is  one 
■of  two  or  more  co-executors,  the  family  lawyer  often  acting  with  the 
company.  In  such  case  the  trust  company  usually  keeps  the  accounts 
and  is  custodian  of  the  securities,  the  duties  of  the  other  co-executors  be- 
ing chiefly  advisory.  The  trust  officer  in  charge  of  this  work  should  be 
well  versed  in  the  law  of  administration,  and  often  special  legal  advice 
is  needed.  Careful  judgment  is  called  for  in  many  cases,  and  the  skill 
of  experienced  trust  companies  has  often  saved  large  amounts  for  estates 
that  were  threatened  with  insolvency.  Often  where  debts  are  j)ressing 
the  company  may  make  temporary  advances  of  money,  thus  preserving 
the  property.  The  passing  upon  claims  is  a  task  requiring  judgment 
and  a  knowledge  of  the  law.  Care  should  be  taken  not  to  pay  claims 
barred  by  the  statute  of  limitations.  All  records  and  reports  should  be 
full  and  accurate  and  one  point  of  tiie  trust  company's  superiority  for 
such  work  lies  in  its  ability  to  attend  to  these  matters  with  skill  and  care. 
Getting  ))ossession  of  the  assets  is  sometimes  a  matter  requiring  tact 
and  industry. 

The  duties  of  the  administrator  are  very  similar  to  those  of  the  ex- 
ecutor. The  executor  is  appointed  by  the  testator  and  his  duties  are 
usually  detailed  in  the  will.     The  administrator's  appointment  comes  from 


440  TRUST   COMPANIES. 

the  court,  and  his  duties  are  detailed  in  the  laws  of  the  state,  except  in 
the  case  of  an  administrator  Avith  the  will  annexed.  As  in  the  case  of 
the  executor,  he  is  charged  with  the  duty  of  gathering  the  assets,  paj'ing- 
the  debts  and  distributing  the  property.  His  distribution  may  be  deter- 
mined by  the  laws  of  descent  instead  of  by  the  provisions  of  a  will.  The 
administrator  is  rarely  charged  with  the  sale  of  real  property,  and  may 
not  make  such  sale  except  on  order  of  the  court.  An  administrator  is 
appointed  when  the  deceased  has  made  no  will,  or  has  made  a  will  and 
appointed  no  executor,  or  when  an  executor  has  failed  to  qualify,  re- 
fused to  act,  or  died. 

Trustee. 

The  trust  company  which  is  named  as  executor  of  a  will  is  also  often 
made  trustee  under  the  will ;  and  in  such  case  after  its  discharge  a& 
executor  it  continues  the  management  of  specified  property  in  the  ca- 
pacity of  trustee.  Tnisteeships  under  wills  are  also  frequently  re- 
ceived independently  of  executorships.  The  most  common  purposes 
leading  to  the  creation  of  such  trusteeships  are  the  keeping  all  or  part 
of  the  estate  intact  for  the  benefit  of  heirs  and  the  endowment  of  some 
charitable  or  educational  enterprise.  The  law  limits  the  duration  of 
trusts  for  the  benefit  of  persons  to  the  life  of  two  persons  in  being  and 
twenty-one  years  thereafter;  but  trusts  for  charitable  purposes  may  be 
in  perpetuity. 

The  duty  of  the  trustee  involves  the  entire  management  of  the  prop- 
erty entrusted  to  his  care.  The  title  is  vested  in  him,  and  his  first  step 
is  to  obtain  possession.  He  is  held  to  diligence,  intelligence  and  good 
faith  in  the  exercise  of  his  powers,  and  is  responsible  for  failure  to  do 
things  necessary  to  the  good  of  the  estate  as  well  as  for  the  doing  of 
illegal  or  unauthorized  acts.  He  must  invest  idle  funds  within  a  reason- 
able time  and  exercise  care  to  make  the  income  of  the  estate  as  large  as- 
is  consistent  Avith  the  entire  safety  of  the  principal.  He  is  under  obli- 
gation to  examine  the  investments  held  by  the  estate  when  he  assumes 
control,  to  see  that  they  are  safe  and  reasonably  productive;  and  to  dis- 
pose of  any  that  appear  unsafe  or  that  are  declining  in  value,  as  soon 
as  may  be  expedient,  but  not  so  hastily  as  to  cause  loss  thereby  He 
must,  in  short,  do  and  refrain  from  doing  things  which  a  prudent  man 
would  do  or  refrain  from  doing  with  his  own  estate;  save  that  he  may 
not  take  the  risks  which  even  a  prudent  man  might  take  with  his  own- 
property,  and  he  must  follow  to  the  letter  any  specific  and  lawful  instruc- 
tions contained  in  the  will.  In  matters  not  covered  by  directions  in  the 
will,  he  is  bound  to  know  and  to  follow  the  provisions  of  the  specific  or 
general  laws  relating  to  his  duties  and  limitations.  The  routine  duties 
of  the  office  ordinarily  include  the  preservation  and  if  possible  the  in- 
crease of  the  estate,  the  investment  of  funds,  the  collection  and  dis- 
bursement of  income,  and  at  the  termination  of  the  trust  the  final  dis- 
tribution of  the  estate  according  to  the  terms  of  the  will. 


DUTIES  AND  LIABILITIES  OF  TRUST  COMPANIES.    411 

Trusteeships  under  spet-ial  agreement,  taking  effect  during  the  grant- 
or's life,  may  be  undertaken  for  the  same  purposes  for  whicli  testa- 
mentary trusts  may  be  created — for  any  lawful  purpose — and  may  be  of 
the  same  duration.  In  case  the  trust  becomes  in  force  at  once,  the 
grantor  may  reserve  tlie  right  to  general  oversight  of  the  management 
of  the  property  and  the  power  to  alter  or  revoke  the  trust  instrument 
during  liis  or  her  life,  or  the  trust  may  be  irrevocable.  Trusts  of  this 
kind  are  created  to  establisli  a  fund  for  charitable  purposes,  to  provide 
for  support  of  inconipetent  individuals  or  of  individuals  who  do  not  wish 
to  manage  their  own  business  affairs.  Sometimes  the  trust  is  created  by 
the  grantor  for  his  om'u  benefit,  to  avoid  care  and  res])onsibilitv.  The 
variety  of  trusts  of  this  character  is  increasing  as  the  adaptability  of  the 
trust  company  to  their  handling  becomes  better  understood.  A  plan 
that  is  growing  in  favor  is  that  of  appointing  a  trust  company  as  trustee 
of  the  proceeds  of  life  insurance  jDolicies.  By  this  means  the  insured 
is  enabled  to  direct  the  disposition  of  such  funds  after  his  death  as  he 
wishes,  and  at  the  same  time  place  the  funds  in  the  hands  of  a  company 
amply  able  to  manage  them  in  a  business-like  manner.  The  company  col- 
lects and  invests  the  proceeds  of  the  policy  or  policies,  and  pays  to  the 
beneficiaries  the  income;  or  if  the  amount  is  not  sufficient  to  provide  the 
income  needed  for  support  of  the  beneficiaries,  arrangement  may  be  made 
for  the  payment  of  an  annuity  for  a  certain  number  of  years,  using  the 
income  and  gradually  reducing  the  principal.  In  order  to  keep  the  re- 
maining part  of  the  fund  always  invested,  the  trust  may  be  given  partici- 
pation in  a  mortgage  or  group  of  mortgages.  In  the  creation  of  such  a 
trust,  the  trust  company  is  named  in  the  policy  as  beneficiary  in  trust 
for  whomsoever  the  grantor  may  wish,  and  at  the  same  time  there  is 
executed  a  deed  of  trust  vesting  title  in  the  trustee  and  directing  the  use 
of  the   funds. 

Another  form  of  trust  made  possible  by  the  development  of  the  trust 
company  is  the  accumulation  of  a  fund  for  the  purchase  or  building  or 
maintenance  of  a  home  for  the  wife  or  cliildren  or  other  beneficiaries  of 
the  donor. 

In  a  similar  way,  churches  and  educational  or  charitable  institutions 
may  choose  a  trust  company  as  trustee  for  the  accumulation  and  invest- 
ment of  an  endowment  or  building  fund,  thereby  being  relieved  of  the 
care  of  the  moneys  and  being  assured  of  speedy  and  safe  investment 
thereof.  The  trust  company  is  able  to  invest  the  funds  in  small  and  odd 
amounts,  interest  included,  by  means  of  participations  in  mortgages  or 
other  securities. 

The  instrument  creating  a  trusteeship  by  agreement  specifies  in  detail 
the  duties  of  the  trustee,  which  may  be  much  the  same  as  those  of  a 
testamentary  trustee. 

GrAROiAN,  C'oNsrnvATon,  Etc. 

As  guardian  of  the  estates  of  minors,  or  conservator,  committee  or 
curator  of  the  estates  of  the  incompetent,  the  duties  are  similar  to  those 


442  TRUST   COMPANIEIS. 

of  testamentary  trustee,  tliougli  in  many  states  the  provisions  of  law, 
especially  as  to  investments,  are  more  stringent.  In  general,  the  guardian 
or  conservator  is  obligated  to  })reserve  the  property,  to  keep  it  on  a  safe 
income-producing  basis,  to  use  the  income  discreetly  for  the  benefit  of  the 
ward,  and  at  the  termination  of  the  trust  to  turn  over  the  balance  on 
hand.  The  guardianship  of  a  minor  is  terminated  when  the  ward  be- 
comes of  age;  that  of  a  person  of  unsound  mind  terminates  at  death,  or 
may  be  terminated  if  the  ward  regains  his  reason.  The  duties  require 
an  intimate  knowledge  of  the  needs  of  the  ward  as  to  living  expenses, 
education,  etc.  Guardianship  by  trust  companies  is  in  most  states  limited 
to  the  estate,  but  in  a  few  states  may  be  either  of  the  person  or  of  the 
estate  or  of  both.  When  of  the  person,  the  duties  involve  close  personal 
supervision  of  the  ward,  as  in  the  case  of  an  individual  acting  as  guar- 
dian. The  gviardian  or  conservator  is  under  the  jurisdiction  of  the  court, 
and  as  in  the  case  of  the  testamentary  trustee  makes  frequent  state- 
ments to  the  court. 

The  Investment  of  Trust  Funds. 

The  investment  of  the  funds  held  in  trust  in  various  fiduciary  capaci- 
ties is  a  matter  requiring  intelligent  judgment.  In  most  states  the  laws 
on  the  subject  are  quite  fully  developed  both  as  to  the  investments  au- 
thorized and  those  forbidden,  and  the  first  duty  of  the  trust  company 
imdertaking  such  work  is  to  thoroughly  inform  itself  as  to  the  laws  of 
the  state  or  states  which  govern  in  the  case  of  each  of  its  trusts.  The 
executor  and  the  administrator  are  not,  as  a  rule,  called  upon  to  invest 
funds,  their  duties  being  rather  to  convert  personal  property  into  cash. 
Yet  there  are  instances  in  which  the  court  may  authorize  them  to  invest 
idle  funds.  On  the  other  hand,  trustees,  guardians  and  conservators 
often  find  the  investment  of  funds  one  of  their  principal  duties. 

The  general  principles  governing  such  investments  are  well  estab- 
lished. The  fiduciary  is  plainly  under  tlie  duty  of  making  the  estate 
produce  an  income,  of  keeping  the  funds  invested  and  not  allowing  them 
to  remain  for  an  unreasonable  length  of  time  merely  on  deposit,  even 
if  drawing  interest.  Yet  the  security  of  the  principal  must  be  the  first 
•consideration,  and  the  amount  of  income  second.  In  most  states  the 
fiduciary  may  not  take  risks  in  the  matter  of  investments  that  even  a 
prudent  man  might  take  with  his  own  money.  Unless  specific  authority 
is  given  in  the  instrument  creating  the  trust,  the  funds  may  not  be  in- 
Tested  in  personal  securities,  in  manufacturing  concerns,  in  trade  or 
business,  or  in  speculation.  Investments  may  not  be  made  in  imimproved 
real  estate  so  as  to  tie  up  the  funds  for  long  periods.  Any  specific  in- 
structions as  to  investments  in  the  will  or  other  instrument  creating  the 
trust  must  be  followed.  The  fiduciary  may  not  derive  profit  from  the 
investment  of  the  trust  funds. 

In  many  states  the  classes  of  investments  permitted  are  specified  by 
the   laws;   and  in   such   states   the   laws   must   of   course  be  strictly   fol- 


IHTIKS  AM)  LIAHII.ITIKS  Ol    TKLST  tO.Ml'ANIKS.     1  kS 

lowed.  In  some  states  only  general  principles  are  laid  down,  while  in 
several  tlie  matter  is  left  to  the  discretion  of  the  trustee.  But  in  any 
case  the  investments  are  subject  to  the  approval  of  the  court;  and  the 
trustee  may  be  coni])elh'd  to  make  good  the  loss  and  pay  interest  if  in- 
vestments have  been  made  which  the  court  cannot  approve.  In  determin- 
ing what  securities  tlie  court  will  approve,  where  the  classes  of  invest- 
ments are  not  specified  in  the  laws,  the  fiduciary  may  often  \>e  guided  by 
the  classes  of  investments  permitted  for  savings  banks.  It  sometimes 
hajipens  tJiat  classes  of  investments  are  specified  for  guardians,  but  not 
for  trustees;  in  which  case  the  latter  may  be  guided  by  the  rules  laid 
down  for  the  former.  It  is  usually  possible,  and  in  the  case  of  guardians 
often  obligatory,  to  obtain  an  order  of  court  authorizing  certain  invest- 
m<'nts.  The  most  common  forms  of  investments  authorized  are  United 
States,  state  and  city  bonds  and  first  mortgages  on  productive  real  estate, 
and  where  there  is  doubt  these  may  be  relied  ui)on.  The  field  is  gradu- 
ally widening,  however,  and  some  statis  specifically  authorize  other  forms 
of  investments,  including  loans  on  collateral,  land,  bank  stocks  and  rail- 
road bonds  and  stocks. 

A  fundamental  principle  is  that  investments  of  trust  funds  must  not 
be  mingled  with  the  assets  of  the  company,  and  the  investments  belong- 
ing to  each  trust  must  be  kept  separate,  so  that  the  owner  may  be  readily 
identified.  The  fiduciary  is,  of  course,  responsible  for  the  safe-keeping 
of  the  securities.  It  is  common  to  allow  access  to  trust  securities  only 
to  two  officers  of  the  company  jointly,  and  removal  of  such  securities 
from  the  vault  only  upon  written  requisition  duly  signed. 

The  troublesome  problem  of  the  investment  of  odd  amounts  and  of 
amounts  too  small  to  permit  of  the  purchase  of  a  bond  or  a  mortgagee  is 
being  solved  satisfactorily  by  giving  the  estate  a  participation  in  a  mort- 
gage or  in  a  group  of  securities.  IJy  this  means  any  amount  tliat  an 
estate  may  have  in  hand  may  be  made  to  produce  an  income  without 
great  delay. 

When  securities  are  purchased  at  a  premium  over  their  face  value,  the 
interesting  question  arises  whether  the  present  beneficiary  is  entitled  to 
the  full  income,  or  whether  a  portion  of  the  income  must  be  reserved  as 
a  sinking  fund,  so  that  at  maturity  of  the  security  the  princii)al  will  be 
intact.  The  question  is  of  great  importance  where  there  is  a  life  tenant 
to  whom  the  income  is  to  be  paid,  the  principal  at  the  death  of  the  life 
tenant  to  go  to  another  party.  The  question  is  sometimes  settled  in  ad- 
vance by  the  provisions  of  the  instrument  under  which  the  fiduciary  acts; 
but  when  it  is  not  so  settled,  the  safer  jil-in  is  to  withliold  enough  of  the 
income  to  keep  the  principal  intact. 


CHAPTER  XFII. 
TRUST  COMPANIES  OUTSIDE  OF  THE  UNITED  STATES. 

THE  trust  company  has  attained  its  greatest  development,  by  far,  in 
the  United  States,  and  in  the  form  in  which  it  exists  here  may  with 
propriety  be  looked  upon  as  peculiarly  an  American  institution. 
The  germ  of  the  trust  company  idea,  however,  has  not  been  altogether 
lacking  in  other  parts  of  the  world ;  and  Australia  has  developed  corpora- 
tions which  adhere  strictly  to  the  original  and  distinctive  function  of  the 
trust  company — fiduciary  business. 

As  far  back  as  the  beginning  of  the  nineteenth  century,  the  idea  of 
providing  corporate  agencies  for  the  transaction  of  business  as  trustee 
and  agent  was  put  into  practice  in  India  by  the  "Agency  Houses." 
"These  were  concerns  organized  to  transact  biisiness  for  trustees  or  indi- 
viduals, to  receive  monej'S  on  deposit,  and  to  administer  estates;"  and  a 
knowledge  of  their  operations  inspired  the  undertaking  of  this  class  of 
business,  as  early  as  1836,  by  one  of  the  earliest  of  American  trust  com- 
panies.'"^ 

During  their  second  occupation  of  Cape  Colony,  South  Africa,  at  the 
beginning  of  the  nineteenth  century,  it  appears  that  the  Dutch  estab- 
lished public  corporations  for  the  management  of  the  estates  of  deceased 
persons;  an  idea  which  the  English  adopted,  after  their  reoccupation  of 
the  Cape,  by  the  establishment  of  their  first  "Trustee  and  Executor  Com- 
pany" in  1832.  This  company  had  a  capital  of  X29,100,  divided  inta 
168  shares  of  <£l75  each.  "It  combined  a  purely  trust  business  with  a 
form  of  banking,  and  apparently  had  power  to  allow  interest  on  trust 
funds,  and  to  trade  with  them.°-  There  are  now  four  trust  companies 
in  Johannesburg,  South  Africa,  two  of  which  also  do  a  life  insurance 
business,  like  the  early  trust  companies  of  the  United  States.^^ 

The  Australian  Trustee  Company. 

Trust  companies,  as  corporations  for  the  transaction  of  trustee  busi- 
ness, pure  and  simple,  are  well  established  in  Australia,  and  their  business 
is  steadily  growing.  They  appear  to  have  been  uninfluenced  by  the  trust 
companies  of  the  United  States,  partaking  of  none  of  the  characteristics 
of  the  "financial  department  store,"  but  adhering  to  one  general  line 
of  business. 

The  records  of  the  first  of  these  companies — The  Trustees,  Executors 
and   Agency   Co,   Ltd.,   of   Melbourne — show  that  its   organization   Avas 

91  Sketch  of  The  Pennsylvania  Company  for  Insurance  on  Lives  and  Granting 
Annuities,   Philadelphia,   pp.   32-35. 

92  The  Age.  Melbourne,  Australia,  January  21,  1907.  See  also  "Dalgety's  Review," 
Melbourne,  August,  1906. 

93  Ernest  Heaton:   The   Trust   Company  Idea  and  Its  Development,  p.  34. 


TRUST  COMPANIES  OUTSIDE  OF  THE   U.  S.  nr, 

inspired  by  a  knowledge  of  the  success  of  the  trustee  and  executor  com- 
panies of  Soutli  Africa.  It  was  established  in  1878,  making  progress 
ratluT  slowly  for  the  first  few  years,  during  which  it  had  practically  no 
competition.  About  1885  the  public  began  to  awaken  to  the  value  of 
such  institutions,  and  between  that  date  and  1893  thirteen  more  coujpanies 
were  organized  in  various  parts  of  the  Conunonwealth,  all  of  which  are 
still  in  existence,  making  a  total  of  fourteen  companies  now  doing  busi- 
ness in  Australia.  Of  these,  seven  are  located  in  \'ictoria,  two  each  in 
New  South  Wales  and  Tasmania,  and  one  each  in  Queensland,  South 
Australia  and  West  Australia.  The  table  presented  herewith,  taken  from 
the  Year  Book  of  Australia  for  1907,  gives  a  list  of  these  companies, 
with  the  latest  available  statistics.  The  amounts  of  the  estates  which  are 
held  under  administration  is  published  by  only  seven  of  the  companies, 
the  total  for  the  seven  being  £';?1 ,1'29,~K).  The  Year  Book  estimates  the 
total  for  the  other  companies  at  from  i:8.0()(),000  to  £10,000,000,  mak- 
ing a  probable  total  of  estates  held  for  administration  by  all  the  trustee 
companies  of  Australia  of  about  £30,000,000.  As  will  be  seen  from  the 
table,  the  dividends  ranged  from  4VL'  P<^i"  cent,  to  11  per  cent. — averaging 
over  8  per  cent. — while  in  some  cases  the  excess  of  the  net  earnings  over 
the  amounts  of  the  dividends  permitted  substantial  additions  to  the 
■"reserve  funds"  and  undivided  profits. 

The  statistics  given  in  the  table  reflect  the  different  character  of  the 
Australian  trustee  company  as  compared  with  the  American  trust  com- 
pany in  one  important  particular — there  are  no  deposits.  The  Australian 
trustee  company  does  not  receive  deposits,  and  does  neither  a  counner- 
cial  nor  a  savings  banking  business.  Nor  does  it  exercise  any  of  the  other 
auxiliary  powers  common  to  trust  companies  in  the  United  States,  except 
that  in  a  few  cases  safe  dej^osit  vaults  are  maintained,  which  are  found 
unprofitable  because  the  banks  do  such  business  free  of  charge.  As  will 
be  seen  below,  the  functions  of  these  companies  are  practically  limited  to 
those  exercised  by  the  probate  division  of  the  trust  department  of  the 
American  trust  company. 

The  fourteen  companies  arc  chartered  and  their  jHiwers  and  limita- 
tions are  defined  in  every  case  by  private  act ;  but  in  Victoria  there  is 
also  some  general  legislation  designed  to  regulate  the  business.  The  acts 
are  all  essentially  the  same,  and  their  general  character  may  be  seen 
from  an  outline  of  the  act  conferring  powers  upon  the  original  company 
— The  Trustees,  Executors  and  Agency  Company,  Limited,  of  Melbourne, 
which  is  also  the  largest  Australian  trustee  company,  and  probably  the 
largest  com})any  in  the  world  carrying  on  exclusively  the  administration 
of  estates.  It  has  a  })aid-up  capital  of  i;;)0.000,  reserve  fund  and  undi- 
vided profits  of  £56,8'2(i,  and  the  amount  at  credit  of  estates,  trusts  and 
clients  on  December  ."^l,  1906,  was  i:8,754,;>")l. 

The  act  conferring  powers  upon  this  company  starts  with  a  preamble 
setting  forth  tiiat,  "Wliereas,  from  the  uncertainty  of  human  life  and  from 
other  causes  great  ditfieulty  often  arises  in  s«-euring  the  services  of  suit- 


446 


TRUST  COMPANIES. 


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TRUST  COMPANIES  OL'TSIDE  OF  THE   V.  S.  4t7 

able  persons  for  the  office  of  trustee,  executor  and  other  similar  offices; 
and  wliereas,  in  order  to  secure  the  more  certain  discharge  of  tl»e  duties 
of  such  offices  a  company  has  been  formed  and  incorporated,"  etc. 

Tlie  powers  granted  in  this  and  suceetding  acts  or  by  the  general 
statutes  of  Victoria  are  (as  stated  in  the  couipany's  circular)  to  act  a* 
executor  under  wills  alone  or  jointly,  as  administrator  in  intestate  es- 
tates, as  administrator  with  the  will  annexed,  as  trustee  under  marriage 
and  other  settlements,  as  trustee  in  eases  of  settlement  of  property  for 
the  benefit  of  women  and  children,  as  temporary  executor,  administrator 
or  trustee,  as  receiver  and  committee  of  estates  under  the  Lunacy  Statute, 
as  agent  for  absentees  or  others,  as  guarantor  or  surety  for  the  proper 
administrator  of  estates;  to  take  over  existing  trusts  from  individual  trus- 
tees, to  collect  income,  invest  funds,  manage  or  realize  estates  and  per- 
form general  agency  business,  and  to  invest  its  own  funds  on  clearly 
defined  lines.  To  the  powers  specifically  granted  the  company  is  strictly 
held  by  the  Trustee  Companies  Act  of  1890,  which  says  (section  .385) 
that  a  trustee  company  "Shall  not  engage  in,  carry  on  or  be  concerned  in 
any  business  trade  venture  or  undertaking  of  any  kind  whatsoever  other 
than  such  as  is  expressly  authorized  by  the  special  act  or  acts  relating 
to  such  trustee  company,  and  other  than  general  agency  business,  and 
other  than  the  deposit  of  its  own  funds  with  a  company  or  person  carry- 
ing on  the  business  of  a  bank  of  deposit,  and  other  than  the  investment  of 
such  funds  in  the  stock  debentures  or  marketable  securities  of  any  Gov- 
ernment corporation  or  company  or  on  mortgage  of  real  property  or 
Crown  leasehold.  Provided,  that  any  such  company  may  guarantee  the 
safety  of  the  princi))al  and  the  regular  payment  of  the  interest  of  trust 
funds  committed  to  its  management  as  executor,  administrator  or  trustee, 
and  provided  that  any  such  company  may  give  or  enter  into  any  l>ond 
or  guarantee  for  the  purpose  of  enabling  any  person  or  persons  to  obtain 
administration  of  the  estate  of  any  deceased  person  or  persons  in  any 
case  wl'.cre  such  estate  shall  be  placed  under  the  management  or  control 
of  such  company  by  the  administrator."  The  section  closes  wilh  these 
words:  "Any  director,  member  (stockholder)  or  officer  of  a  trustee  com- 
pany wl'.o  is  shown  to  be  concerned  in  or  a  party  to  any  wilful  breach  of 
tJie  provisions  of  this  section  shall  be  guilty  of  a  misdemeanor." 

The  special,  act  provides  that  £10.000  of  the  capital  of  the  company 
shall  be  invested  in  debentures  or  inscribed  stock  of  the  colony,  to  stand 
in  the  name  of  the  Treasurer  of  the  colony  in  trust  for  said  comi)any.  but 
transferable  only  upon  the  joint  consent  of  the  Treasurer  of  the  Colony 
and  the  said  conipany,  or  upon  the  order  of  the  Supreme  Court  or  of  a 
judge  of  said  Court.  This  fund,  together  with  the  balance  of  the  cap- 
ital, "Iwth  jiaid  and  unpaid,"  and  the  other  assets  of  the  company,  stand 
in  lieu  of  special  bonds  in  cases  of  administration.  The  amount  of  this 
deposit  for  the  other  companies  varies  from  .£5,000  to  £20,000.  accord- 
ing to  the  size  of  the  company.  The  stockholders  are  subject  to  double 
liability. 


448  .  TRUST   COMPANIES. 

The  act  provides  for  careful  supervision  and  holds  the  company  and 
its  officials  to  strict  accountability.  It  is  "subject  in  all  respects  to  the 
i?ame  control  and  liable  to  removal  as  private  individuals"  acting  in  sim- 
ilar capacities.  Any  person  legally  interested  in  an  estate  under  the 
company's  administration  may  through  the  Supreme  Court  compel  an 
accounting.  The  Treasurer  of  Victoria  may  likewise  compel  the  render- 
ing of  an  account.  The  Supreme  Court  may  at  any  time  require  an 
audit  of  any  estate  in  the  hands  of  the  company,  by  an  auditor  appointed 
by  said  court.  The  following  provision,  similar  to  that  already  quoted 
from  the  general  statutes,  is  significant:  In  every  case  where  the  company 
acts  as  administrator,  trustee,  receiver  or  committee,  "The  managing  di- 
rector, manager  and  directors  shall  be  individually  and  collectively  in 
their  own  proper  persons  responsible  to  the  court,  and  shall  in  their  own 
proper  persons  be  liable  by  process  of  attachment  commitment  for  con- 
tempt or  by  other  process  to  all  courts  having  jurisdiction  in  that  behalf 
for  the  proper  discharge  of  their  duties  and  for  obedience  to  the 
rules,  orders  and  decrees  of  such  courts  in  the  same  manner  and  to  the 
same  extent  as  if  such  managing  director,  manager  and  directors  had 
personally  obtained  probate  or  letters  of  administration,"  etc.  This  does 
not,  however,  release  the  assets  of  the  company  from  liability  for  pe- 
cuniary loss  occasioned  by  imperfect  or  improper  discharge  or  neglect 
■of  duty. 

Moneys  remaining  unclaimed  for  a  period  of  five  years  by  the  person 
entitled  to  same  are  to  be  paid  by  the  company  to  the  Receiver  of  Rev- 
enue in  Melbourne,  and  by  him  be  placed  in  "The  testamentary  and  trust 
fund,"  which  is  invested  in  Government  debentures  or  stock.  The  com- 
pany is  required  to  deliver  to  the  Treasurer  at  the  end  of  every  six  months 
a  statement  of  all  such  unclaimed  moneys;  and  for  default  in  compliance 
with  the  provisions  of  this  section  is  liable  to  a  penalty  not  exceeding  five 
pounds  for  every  day  while  such  default  continues,  "and  every  director 
and  manager  of  the  company  who  knowingly  and  wilfully  authorizes  or 
permits  such  default  shall  incur  the  like  penalty."  A  similar  penalty  is 
imposed  for  failure  to  render  the  regular  reports  to  the  Government, 
which  must  be  rendered  according  to  a  prescribed  form  on  the  first  Mon- 
day in  February  and  the  first  Monday  in  August  every  year. 

Considering  the  limitations  placed  upon  the  companies,  the  supervision 
maintained  over  them,  and  the  penalties  to  which  the  companies  them- 
selves and  their  officers  individually  are  subject  in  case  of  violation  of  law, 
one  is  not  surprised  at  the  statement  of  a  recent  writer  that  "Not  one  of 
the  fourteen  trust  companies  has  lost  a  single  penny  of  its  capital  or  of 
the  money  of  its  beneficiaries,  or  has  ever  been  removed  from  trusteeship, 
or  held  liable  for  any  neglect,  wrong-doing,  or  breach  of  trust  by  any 
court  in  the  Commonwealth  during  the  whole  time  they  have  been  in 
existence." 

Reference  to  the  table  given  above  discloses  the  fact  that  in  no  case 
is  the  subscribed  capital  paid  up,  while  in  most  cases  the  uncalled  capital 


TRUST  COMPANIES  OL'TSIDK  OF  THK    L.   S.  449 

far  exceeds  the  paid  up  capital.  Tlie  total  subscribed  capital  is  £3,253,- 
555,  the  paid  up  capital  £404,422,  leaving  the  uncalled  capital  £2,849,- 
133.  This  is  regarded  as  a  very  strong  feature  of  the  companies,  the 
uncalled  capital  being  looked  upon  as  a  great  protection  to  the  creditors. 
"It  is  almost  unnecessary  to  point  out  that  this  (the  uncalled  capital) 
represents  a  very  considerable  security  for  the  proper  administration  ot 
estates,  especially  as  the  companies  are  generally  very  conservative  with 
their  share  lists,  refusing  to  accept  as  shareholders  any  who  cannot  sat- 
isfy them  as  to  their  financial  soundness.  There  is  generally  a  limit  to 
the  number  of  shares  which  may  be  held  by  each  shareholder,  this  being 
2,000  in  the  case  of  the  Perpetual,  and  there  is  with  most  of  the  compa- 
nies a  provision  that  a  large  i)ortion  of  the  capital  can  only  be  called 
up  in  the  event  of  liquidation,  such  portion  being,  therefore,  practically 
earmarked   as.   security   to  the   trusts.''* 

The  scales  of  charges  for  services  varies  somewhat  with  the  different 
companies.  Those  of  The  Trust<es,  Executors  and  Agency  Co.,  Ltd., 
which  fairly  represent  the  average,  are  as  follows:  For  acting  as  exec- 
utor, administrator,  trustee  under  will,  receiver  and  committee  of  estate 
under  Lunacy  Statute,  2^,^  P'^''  cent,  on  the  capital  value  (gross)  of  the 
estate  up  to  £50,000;  Uj  per  cent,  on  the  amount  from  £50,000  to  £100,- 
000;  1  per  cent,  on  the  amount  over  £100,000;  2V-i  per  cent,  on  al! 
income  received;  on  transferred  trusts,  marriage  and  other  settle- 
ments, not  exceeding  5  per  centum  on  income  received,  but  charge  sub- 
ject to  arrangement.  Charge  on  corpus  (capital),  as  above,  on  distri- 
bution. 

The   New  Zealand   Ptblic   Tritst  Okfice. 

There  are  two  trustee  companies  in  New  Zealand — The  Perpetual 
Trustees'  Estate  &  Agency  Co.,  of  New  Zealand,  Ltd.,  and  The  Trustees. 
Executors'  and  Agency  Co.,  of  New  Zealand,  Ltd.,  both  located  at  Dune- 
din.  They  are  small  companies,  having  resources  of  about  £28.000 
each.  The  administration  of  estates  in  the  island  is  mainly  in  the  hands 
of  The  Public  Trust  Office,  which,  though  not  a  trust  company,  is  con- 
sidered here  because  of  its  unique  character  and  its  evident  interest 
to  students  of  the  trust  company  movement. 

The  Public  Trust  Office,  which  is  a  department  of  the  Government 
service,  Avas  constituted  by  "The  Public  Trust  Office  Act"  of  1872.  and 
its  functions  have  been  enlarged  by  succeeding  acts.  The  office  is  admin- 
istered by  an  officer  of  the  (iovernment,  known  as  the  Public  Trustee. 
There  is  an  advisory  body,  known  as  "The  Public  Trust  Office  Board," 
consisting  of  the  Colonial  Treasurer  and  two  other  members  of  the  Min- 
istry, with  four  other  officials,  of  whom  three  fomi  a  quorum.  The  con- 
sent of  this  board  is  necessary  before  the  Public  Trustee  can  accept  any 
appointment.  The  Public  Trustee  is  forbidden  to  accept  any  appointment 
jointly  with  any  other  person. 


94  C.   E.  Cowdery,  of  Th«>   Perpetual  Tru.«tee  Co..  Ltd..  S.vdney,  Jn  "Trust  t."om- 
panles"  magazine.  Vol.  II.   p.   676. 
29 


450  TRUST   COMPANIES. 

Any  person  may  appoint  the  Public  Trustee  a  trustee,  executor,  ad- 
ministrator, guardian,  committee,  agent  or  attorney — subject,  of  course, 
to  the  consent  of  the  Public  Trustee — and  the  duties  and  rights  of  the 
latter  are  the  same  as  if  a  private  person  had  been  appointed.  Trustees 
may,  with  the  consent  of  the  court,  appoint  the  Public  Trustee  sole  trus- 
tee in  their  places,  while  executors  and  administrators  are  expressly  au- 
thorized to  appoint  the  Public  Trustee  sole  executor  or  administrator. 
No  vesting  order  is  required,  as  all  the  property  by  virtue  of  the  appoint- 
ment, and  without  any  conveyance  or  assignment  thereof,  becomes  vested 
in  the  Public  Trustee.  Any  testator  may  deposit  his  will  in  the  Public 
Trust  Office. 

Upon  the  death  intestate  of  an}^  person  domiciled  or  having  property 
in  New  Zealand,  the  Public  Trustee  is  entitled  to  administration  as  of 
right,  and  is  not  bound  to  give  notice  to  any  person  who  but  for  this 
provision  would  be  entitled  to  the  grant,  though  power  is  reserved  for 
the  court  to  make  a  grant  to  such  person  if  it  sees  fit.  Where  an  intestate 
estate  is  under  £250  the  Public  Trustee  can  administer  without  even 
getting  a  grant,  and  where  an}"^  person  dies  testate,  and  application  for 
a  grant  is  not  made  Avithin  three  months,  the  Public  Trustee  can  apply 
for  and  obtain  a  grant  of  letters  of  administration,  unless  the  executor 
can  satisfy  the  court  that  the  delay  has  been  unavoidable  or  accidental. 
In  the  matter  of  procedure,  special  privileges  are  allowed  to  the  Public 
Trustee. 

The  provisions  for  the  disposition  of  the  funds  are  of  peculiar  inter- 
est. A  testator  or  settler  may  direct  special  investments  for  his  moneys, 
in  which  case  the  directions  are  followed,  at  the  risk,  of  course,  of  the 
estate.  All  other  capital  moneys,  however  arising,  and  whether  directed 
to  be  invested  or  not  (unless  expressly  forbidden  to  be  invested)  become 
one  common  fund,  and  are  invested  in  certain  securities  defined  in  the  act. 
From  the  income  on  this  common  fund  interest  is  paid  to  the  several 
estates  at  a  rate  to  be  determined  from  time  to  time  by  the  Governor  in 
Council,  and  is  credited  quarterly.  The  rate  to  be  allowed  is  limited  to 
5  per  cent,  on  amounts  not  exceeding  £3,000,  and  on  larger  amounts 
must  not  exceed  5  per  cent,  on  the  first  £3,000  and  4  per  cent,  on  the 
excess  over  £3,000.  The  common  fund  is  practically  guaranteed  by  the 
state;  if  the  fund  is  insufficient  to  meet  the  lawful  claims  thereon,  the 
Colonial  Treasurer  shall  pay  such  sums  out  of  the  consolidated  fund  as 
may  be  necessary  to  meet  such  deficiency. 

"The  charges  for  realization  of  any  estate,  whether  of  lunacy,  intes- 
tacy, wills,  or  agency,  are:  Any  sum  up  to  £1,000,  5  per  cent.;  on  the 
next  £3,000.  3  per  cent.;  on  the  next  £6,000,  2  per  cent.;  on  all  over 
£10,000,  iVi'  per  cent.;  provided  that  with  respect  to  cash  or  balances 
at  the  bank,  or  mone}'^  received  under  any  policy  of  insurance,  there  shall 
be  charged  a  percentage  of  only  half  the  above."  These  are  maximum 
charges,  and  may  be  and  often  are  reduced  under  special  circumstances. 
With  regard  to  income,  as  soon  as  all  the  property  has  been  realized  and 


TRL'ST  COMPANIES  OUTSIDE   OE   THE   V.   S.  I'.l 

the  money  has  been  transferred  to  the  common  lund  of  the  office,  thr 
income  is  as  a  matter  of  practice  paid  to  the  beneficiaries  free  of  all 
office  commission,  though  there  is  a  provision  for  a  charge  not  exceeding  5 
per  cent,  upon  such  income.  The  office  pays  expenses  and  makts  a 
small  profit. 

The  office  appj-ars  to  be  of  tlie  greatest  benefit  to  the  connnunity  in 
the  handling  of  small  intestate  estates.  By  the  Lunacy  Act  of  188'2,  the 
Public  Trustee  is  authorized  to  undertake  tlie  administration  of  the 
estates  of  lunatics  in  every  case  where  no  comniittec  may  be  appointed 
for  tlie  estate,  and  90  per  cent,  of  estates  of  lunatics  in  the  asylums  are 
administered  by  him. 

According  to  the  New  Ztajand  Year  Hook,  the  total  vahic  of  the 
estates  in  the  hands  of  the  Public  Trustee  in  1903  was  as  follows:  Wills 
and  trusts,  £\, 279,7  i3;  intestate  estates,  £197 MS;  real  estates,  .£7,585; 
lunatic  estates,  ,£170,585;  native  reserves,  £375,000;  West  Coast  settle- 
ment reserves,  £655,000;  xniclaimed  lands,  £21,501;  making  a  total  of 
£2,706,785.      (The  population  of  Xtw  Z.aland  is  about  800,000.) 

Cax.\diax  Thi'st  Companies. 

The  Canadian  trust  companies,  as  to  their  powers  and  limitations, 
occupy  a  position  between  those  of  the  Australian  trustee  company  and 
the  American  trust  company.  While  they  differ  somewhat  among  them- 
selves, none  of  them  exercise  the  wide  powers  of  the  latter,  and  none  are 
so  closely  restricted  as  the  trustee  companies  of  Australia.  Some  of  the 
charters  under  which  the  difl'erent  companies  act  permit  of  rather  wide 
powers;  but  in  practice  many  of  the  powers  have  not  been  exercised,  and 
the  business  of  the  companies  is  mainly  confined  to  the  duties  of  trustee, 
administrator,  the  management  of  estates  and  the   investment  of   funds. 

They  do  not  undertake  a  comnu-rcial  banking  business,  nor  do  they 
as  a  rule  take  ordinary  savings  deposits,  although  three  or  four  of  them 
have  in  very  recent  years  established  savings  dej)artments,  and  one  at 
least  is  advertising  "banking  by  mail."  Until  within  very  recent  years 
ihey  have  not  undert.-iken  to  do  corporate  trust  work,  such  as  receiving 
and  alloting  sub'^criptions  for  stock,  acting  as  transfer  agents,  etc.:  but 
a  few  companies  are  now  doing  that  class  of  work.  A  few  of  the  com- 
panies are  closely  associated  with  loan  companies,  and  trust  and  loan 
companies  appear  under  the  same  headings  in  the  (Jovernment  reports — 
as  is  the  case  in  several  st;»tes  of  tlu-  Union. 

The  number  of  separate  companies  now  in  existence  is  thirteen,  their 
aggregate  resources,  including  trust  funds  and  estates,  being  in  the 
neighborhood  of  eighty  million  d«»llars.  Of  these  thirteen  companies, 
the  main  offices  of  five  are  located  in  Toronto,  of  one  in  Halifax,  of  two 
in  London,  Ontario,  of  two  in  Montreal,  of  one  in  Vancouver  and  of 
two  in  Winnipeg.  S«'vcn  of  the  companies  maintain  branches  in  other 
cities,  the  total  number  of  such  branches  bt  ing  eighteen.  Some  of  the 
companies  maintain  safe  dejiosit  departments. 


452  TRUST   COMPANIES. 

Ontario  and  New  Brunswick  have  general  laws  affecting  trust  com- 
panies, but  the  laws  are  of  incomplete  character.  The  Ontario  Trust 
Company  Act  (18P7,  Cap.  206)  provides  that  the  High  Court  may- 
appoint  a  suitable  person  to  investigate  the  affairs  and  management  of 
a  trust  company,  and  the  Lieutenant-Governor  may  appoint  an  inspector 
to  examine  the  affairs  of  such  company  and  report  on  the  security  af- 
forded to  those  for  whom  its  engagements  are  held. 

Applications  for  trust  company  charters  may  be  referred  by  the 
Lieutenant-Governor  to  the  High  Court  of  Justice  for  an  opinion  as  to 
the  necessity  for  incorporation  of  the  company,  having  regard  to  the 
business  to  be  done  and  companies  already  incorporated  and  doing  busi- 
ness, and  whether  the  public  convenience  and  advantage  would  be  pro- 
moted. If  the  opinion  is  unfavorable,  the  application  shall  not  be  pro- 
ceeded with. 

The  New  Brunswick  statute  (1902,  Cap.  106)  authorizes  the  appoint- 
ment as  trustee  of  a  trust  company  which  is  approved  by  the  Lieutenant- 
Governor.  The  company  is  subject  to  inspection  at  any  time,  and  is  re- 
quired to  deposit  with  the  Receiver-General  such  sum  of  money  or  amount 
of  securities  as  he  may  deem  sufficient  as  security  for  the  proper  per- 
formance of  its  trusts  within  the  province.  The  statutes  of  both  provinces 
prohibit  trust  companies  from  issuing  debentures,  and  authorize  them  to 
receive  as  deposits  the  sinking  funds  of  municipalities  and  corporations. 

Seven  of  the  Canadian  trust  companies  have  been  established  since 
the  year  1900;  five  were  established  during  the  nineties.  The  first  trust 
company  in  the  Dominion,^ — ^The  Toronto  General  Trusts  Corporation, — 
which  is  also  considerably  the  largest  trust  company  there,  began  busi- 
ness in  1882,  under  a  special  charter  granted  by  the  Government  of 
Ontario.  On  December  31,  1907,  it  reported  total  liabilities  of  $32,909,- 
902.68,  of  which  the  principal  items  were  Capital  and  "Reserve"  (Sur- 
plus), $1,400,000;  Trust,  Guarantee  and  Agency  Funds,  $16,654,332; 
Trust  Estates  and  Agencies,  $14,785,702.  The  company  confines  itself 
chiefly  to  trustee  business,  though  its  charter  grants  wider  powers.  It 
does  not  receive  deposits,  nor  underwrite  securities.  It  transacts  con- 
siderable business  for  the  Government  of  the  Provinces,  invests  court 
funds,  and  has  control  and  management  of  lunatic  estates  in  Ontario. 

Following  is  a  list  of  the  trust  companies  in  Canada: — 

The  Toronto  General  Trusts  Corporation,  Toronto.  (Branches  at 
Ottawa  and  Winnipeg.) 

The  Imperial  Trust  Company  of  Canada,  Toronto. 

The  National  Trust  Company,  Toronto.  (Branches  at  Montreal, 
Winnipeg,  Edmonton   [Alberta],  and  Saskatoon   [Sask].) 

The  Trusts  and  Guarantee  Company,  Toronto.  (Branch  at  Calgarv, 
Alberta.) 

The  Union  Trust  Company,  Toronto.  (Brandies  at  Winnipeg,  Ham- 
ilton   [Ont],  Regina    [Sask.],  and   London,   England.) 

The  Canada  Trust  Company,  London. 


TRUST  COMPANIES  OUTSIDE  OF  THE  U.  S.  453 

The  Easttrii  Trust  Company,  Halifax.     (Branch  at  St.  John,  N.  B.) 

The  London  and  Western  Trust  Company,  London. 

The  Montreal  Trust  and  Deposit  Company,  Montreal.  (Branch  at 
Halifax.) 

The  Royal  Trust  Company,  Montreal. 

The  British-American  Trust  Company.  Vancouver.  (Branches  at 
Clrand  I'orks,  B.  C.,  Victoria,  B.  C.,  Winnipeg;  Agency  at  Spokane, 
Wash.) 

The  Western  Trust  Company,  Winnipeg. 

The  Standard  Trusts   Company,  Winnipeg. 

Othf.ii  CouNTniES. 

Outside  of  the  United  States,  Australia  and  Canada  there  are  no  coun- 
tries in  which  the  trust  company  has  made  enough  progress  to  be  con- 
sidered an  established  institution.  Within  the  past  ten  years,  however, 
beginnings  have  been  made  •which  indicate  the  probability  that  the  trust 
company  movement,  in  somewhat  varying  forms,  will  soon  have  a  firm 
foothold  in  a  number  of  foreign  countries. 

Prior  to  its  admission  as  a  territory  of  the  United  States,  the  trust 
company  had  been  established  in  Hawaii,  and  there  are  now  four  such 
corporations  in  the  Islands,  all  located  at  Honolulu — The  Hawaiian  Trust 
Company,  organized  in  1898;  The  First  American  Savings  and  Trust 
Company;  The  Henry  ^^^1terhouse  Trust  Company  and  The  Bishop 
Trust  Comj)any.  The  trust  functions  exercised  by  these  companies  include 
all  the  ordinary  trust  powers,  and  the  right  "To  transact  as  agents  any 
other  business  or  imdertaking.  trust,  mercantile  or  otherwise,  which  may 
be  necessary,  useful  or  convenient  to  the  main  purpose  of  the  corpora- 
tion." They  handle  as  general  agents  all  kinds  of  insurance.  They 
have  not  banking  powers,  the  statute  speeitically  prohibiting  the  transac- 
tion of  both  a  general  banking  and  a  savings  banking  business. 

There  are  trust  companies  operating  in  Porto  Rico,  devoted  specially 
to  developing  the  resources  of  the  island.  An  American  company  has 
been  formed,  with  headquarters  at  Pittsburg,  to  ojierate  in  the  Philippines. 

In  Cuba  a  beginning  was  made  by  the  establishment  in  January.  1{)06, 
of  The  Trust  Company  of  Cuba,  located  at  Havana.  It  has  a  paid-up 
capital  of  $J00,000,  and  in  June,  1907,  had  surplus  and  undivided 
profits  of  !f!.*n  ,()<)],  and  deposits  of  .t.S'2;i.87'-'.  It  is  closely  patternt d  after 
the  trust  companies  of  the  United  States,  maintaining  Ivinking,  savings, 
trust  and  real  estate  departments.  The  laws  do  not  permit  the  company 
to  act  as  executor,  but  an  executor  may  appoint  it  to  act  for  him.  There 
is  a  considerable  field  for  the  company  in  the  management  of  property 
owned  by  parties  who  reside  in  Spain,  a  large  amount  of  property  in 
Havana  being  so  held. 

In  Mexico  there  have  l>een  started  several  enterprises  under  the  name 
of  trust  companies  which  were  organized  for  speculative  purposes  by 
Americans,  usually  as  branches  of  concerns  in  the  United  States,  which 


454  TRUST   COMPANIES. 

have  gone  out  of  existence.  Effort  has  been  made  to  obtain  general  legis- 
lation providing  for  the  organization  of  trust  companies,  but  thus  far 
without  success.  The  only  existing  trust  company  incorporated  under  the 
laws  of  the  Republic  of  Mexico  is  The  Mexican  Trust  Company  (Com- 
pania  Fideicomisaria  Mexicana)  of  Mexico  City,  which  has"^  capital  of 
$250,000  ($125,000  United  States  money),  and  which  includes  in  its 
directorate  a  number  of  prominent  Mexicans.  The  powers  conferred 
by  its  charter  are  exceedingly  wide,  including  the  right  to  do  a  banking 
business,  to  perform  all  the  ordinary  trust  functions,  "To  promote  the 
incorporation  of  all  kinds  of  companies  in  the  form  it  may  deem  fit,  and 
to  deal  in  their  stocks;  to  buy  and  sell  securities  of  all  kinds;  to  buy  and 
sell  mines  and  to  work  them  on  its  own  account;  *  *  *  to  hold,  acquire, 
transfer  or  lease  concessions  granted  by  the  National  Government  for  the 
exploitation  of  all  kinds  of  natural  products  as  well  as  for  those  which 
have  an  industrial  object;  *  *  *  and  in  general  all  such  business  as  the 
company's  board  of  directors  may  determine."  Plans  are  on  foot  for 
the  establishment  of  other  companies,  presumably  along  the  same  lines. 

In  October,  IPOS,  a  company  known  as  the  Banco  Fomento  Indus- 
trial Americano  was  organized  at  Buenos  Ayres,  Argentine  Republic,  with 
an  authorized  capital  of  $5,000,000 — of  which  at  last  advices,  however, 
only  a  small  part  was  paid  up.  The  company  numbers  among  its  di- 
rectors several  of  the  prominent  men  of  Buenos  Ayres,  which  is  a  pro- 
gressive city  of  over  1,100,000  people.  It  has  as  its  avowed  object  "The 
development  and  enlargement  of  the  established  industries  in  the  country 
or  out  of  it  and  the  introduction  of  new  ones  that  it  is  thought  advisable 
and  opportune  to  establish  and  all  the  operations  that  the  North  Ameri- 
can trust  companies  carry  on."  The  powers  granted  are  very  wide,  in- 
cluding some  of  a  speculative  nature,  in  addition  to  the  more  conserva- 
tive powers  of  the  trust  company  as  we  know  it. 

Japan  entered  into  the  field  in  1902  by  the  establishment  under  Gov- 
ernment auspices,  after  an  official  investigation  of  the  trust  companies  of 
the  United  States,  of  The  Industrial  Bank  of  Japan,  Ltd.  (Nippon  Kogyo 
Ginko).  It  had  an  authorized  capital  of  10,000,000  yen,  which  was  in- 
creased to  17,500,000  yen  in  1906,  and  of  this  at  last  advices  13,750,000 
yen  were  paid  up.  The  company  is  fostered  by  tlie  Japanese  Govern- 
ment, which  guarantees  dividends  of  5  per  cent,  for  the  first  five  years. 
Some  of  the  shares  have  been  placed  in  England  and  in  the  United  States, 
and  the  stock  sells  at  a  good  premium.  In  its  first  year  the  company 
successfully  floated  in  London  an  issue  of  50,000,000  yen  of  national 
bonds,  a  task  entrusted  to  it  by  the  Government.  The  powers  of  the  com- 
pany have  been  considerably  enlarged  since  its  organization,  and  it  now 
advertises  its  lines  of  business  as  follows: 

1.  Loans  on  the  security  of  national  or  local  loan  bonds,  or  deben- 
tures and  shares  of  companies. 

2.  Subscriptions  for  or  taking  over  by  transference,  national  or  local 
loan  bonds,  or  the  debentures  of  companies. 


TRUST  COMPANIES  OUTSIDE  OF  THE   U.  S.  455 

3.  General  deposit  and  safe  deposit  business. 

4.  Business   of  a  trust  company. 

5.  Discounts  of  bills  on  SL'curity  of  national  or  local  loan  bonds,  or 
debentures  and  shares  of  companies. 

6.  Loans  on  mortgage  of  railway,   factory  and  mine. 

7.  Banking  and  attendant  business  in  forcig^i  countries. 

The  by-laws  of  the  company  define  its  trust  business  as  follows: 
"Article  39-  The  trust  "business  to  be  undertaken  by  this  bank  shall  be  in 
general  as  follows: 

1.  To  be  intrusted  with  the  administration,  settlement,  etc.,  concerning 
money,  securities,  movable  and  immovable  jjrojjcrties  and  other  prop- 
erties. 

2.  To  deal  in  matters  relating  to  public  loans,  and  the  loans  and 
shares  of  companies;  such  as  issuing  bonds  or  del)entures,  paying  prin- 
cipal, interest,  profit,  etc. 

3.  To  deal  in  matters  relating  to  mortgaging  debentures  or  to  giving 
guarantees  on  behalf  of  debtors." 

England  and  Scotland. 

Notwithstanding  the  fact  that  since  the  year  1886  repeated  efforts 
have  been  made  to  establish  the  idea  of  the  corporate  trustee  in  Great 
Britain,  the  progress  of  the  movement  has  been  exceedingly  slow.  Two 
very  formidable  obstacles  arc  yet  to  be  overcome — the  excessive  conserva- 
tism of  the  people,  which  results  in  a  decided  lack  of  interest  in  the 
movement,  and  numerous  legal  restrictions  which  confine  corporate  un- 
dertakings of  this  kind  within  very  narrow  limits.  Yet  the  shortcomings 
of  the  individual  acting  in  fiduciary  capacities  are  quite  generally  appre- 
ciated, and  a  number  of  plans  designed  to  remedy  the  conditions  have 
been  proposed  in  Parliament.  One  of  these  was  the  Judicial  Trustees 
Act  of  1896,  which  after  over  ten  years  has  failed  to  interest  the  public 
and  does  not  solve  the  problem.  On  January  1,  l^OS,  howevtr.  The  Pub- 
lic Trustee  Office,  authorized  by  The  Public  Truster  Act  of  1}>()7.  Ugan 
business  in  London,  and  is  meeting  with  success. 

On  the  whole,  tlie  trust  company  movement  in  (ireat  Hritain  is  mak- 
ing prt)gress,  at  least  eight  eor|)i>rations  being  at  present  engaged 
in  trying  to  build  up  this  kind  of  business.  Of  these  the  earliest  was 
The  Public  Trustee,  Limited,  of  Edinburg,  which  was  established  in  1886. 
This  company  is  strictly  limited  to  the  undertaking  of  trusts.  In  1SS7  w.as 
established  the  Trustees.  Executors  and  Securiti«-s  Insurance  Corporation, 
Ltd.,  and  in  1888  the  Law  Guarantee  and  Trust  .^(>ci«ty.  Ltd..  Ixith  located 
in  London.  The  latter  has  some  eight  or  ten  branelns  scattered  over  Eng- 
land and  Scotland,  maintains  a  trust  department,  writes  fidelity  insurance 
and  guarantees  the  payment  of  debentures  and  mortgages. 

The  insurance  companies  have  begun  to  give  their  attention  to  the 
possibilities  of  the  trust  business,  the  Ocean  Accident  and  Guarantee  Cor- 
poration of  London  having  taken  on  trust  jiowers  in  the  early  nineties. 


456  TRUST  COMPANIES. 

while  more  recently  the  Royal  Exchange  Assurance  Company  of  Liver- 
pool, the  Commercial  Union  Assurance  Company  of  London,  and  some 
others,  have  entered  the  field.  There  is  evidence,  too,  that  the  banks 
may  undertake  the  transaction  of  formal  trust  business.  The  Union  of 
London  and  Smith's  having  already  done  so. 

European  Countries. 

The  trust  company  idea  cannot  be  said  to  have  gained  a  foothold  as 
yet  in  any  company  in  continental  Europe.  The  nearest  approach  to  it 
is  in  Germany,  where  there  are  some  companies  of  very  recent  origin 
which  undertake  certain  trust  company  functions  with  regard  to  the 
handling  of  corporations.  These  have  been  organized  by  several  of  the 
large  banking  interests  as  auxiliary  institutions.  The  first,  and  for  some 
time  the  only  one  of  these,  The  Deutsche  Treuhand  Gesellschaft  of  Ber- 
lin, was  organized  in  1890  by  the  Deutsche  Bank  and  the  banking-house 
of  Jacob  Stern  at  Frankfort-on-Main.  Its  business  consists  chiefly  of 
corporate  trust  work — the  formation  an.d  reorganization  of  joint-stock 
companies,  dealing  in  their  shares,  acting  as  agent  for  the  redemption 
of  dividend  warrants,  transfer  agents,  etc. 

The  mortgage  banks  of  Germany  and  Austria,  the  Credit  Foncier, 
Credit  Lyonnais  and  other  companies  in  France,  and  similar  institutions 
in  some  other  European  countries,  perform  functions  analogous  to  the 
lending  and  savings  banking  operations  of  the  American  trust  company,'"' 
but  these  are  not  peculiarlj^  trust  functions,  and  the  institutions  named  da 
not  partake  of  the  distinctive  features  of  the  trust  company. 

96  See  Proceedings  Trust  Company  Section,  A.  B.  A.  1896-1903,  pp.  243-253,  ar- 
ticle by  Charles  F.  Phillips  on  "The  Business  in  Foreign  Countries  Analogous  to 
That  of   Trust  Companies  in  the  United  States"     .    ,/»: 


BIBLIOGRAPHY. 


BOOKS  AND  PAMPHLETS  RELATING  DIRECTLY  TO  TRUST 
COMPANIES. 

Co.MPAitATiVE  Statements  of  Trust  Companies  in  the  State  of  New 
York,  1894-1904.     New  York:  George  W.  Young  &  Co.,  1905.     pp  81. 
Digest  of  Laws  Relating  to  Trust  Companies  of  the  United  States. 
New  York:     George  W.  Young  &  Co.,  1905.     pp  98. 

A  classified  digest  of  State  laws  relating  to  trust  companies. 
Modern   Trust  Company,  The.     F.   B.  Kirkbride  and  J.  E.  Sterrett. 
New  York:  The  MacMillan  Co.,  1905.     pp  309. 

Up  to  the  present  this  is  the   only  general  work  on  the  subject 
published.     Contains  discussions  of  functions,  methods  of  organiza- 
tion, duties  of  ofliccrs  and  employees,  methods  of  accounting,  depart- 
ments   of   work,   Stock    Exchange    rules,   bibliography.      Illustrated 
with  forms. 
Pennsylvania    Company    for    Insurance    on    Lives    and    Granting 
Annuities.  A  Sketch  of  the.     Philadelphia:  J.  B.   Lippincott  Co., 
189G.     pp  168. 

An  historical  and  descriptive  sketch  of  the  oldest  company  in  the 
United  States  now  doing  a  trust  business. 
Trust  Companies  in  the   United  States.     George  Cator.     Baltimore: 
The  .Johns  Hopkins  Press,  1902.     pp   113. 

One  of  the  Johns   Hopkins   University   Studies,  and  intended   to 
give  "a  general  outline  of  the  subject".     Contains  historical  sketches, 
discussions   of   functions,   causes   of   development.   State   regulation, 
schedules  of  State  laws. 
Trust  Companies  or  the  United  States.     New   York:  Published  an- 
nually (since  1903)  by  The  United  States  Mortgage  and  Trust  Co. 

Contains    individual    statistics   of   trust   companies   in   the   United 

States,  Canada  and  Cuba.     Gives  for  each  company  the  statement 

of  assets  and   liabilities,  date  of  organization,  quotations   of   stock, 

dividends,  list  of  officers  and  directors. 

Trust   Company   Idea   and   Its   Development,   Thl.      Ernest   Heaton. 

Buffalo:     The  White-Evans-Penfold  Co.,  1904.     pp  45. 

Discusses  the  growth  of  the  trust  company  idea,  advantages  and 
functions  of  trust  companies,  sketches  of  the  progress  of  trust  com- 
panies in  the  United  States,  Canada,   .\ustralia  and  other  countries. 
Trust  Co.mpanv  Question,  The.     Breckenridge  .Tones.     St.  Louis:  The 
Mississippi  Vnlley  Trust  Co..   189-.     pp  ~l-. 


458  TRUST  COMPANIES. 

This  was  the  first  published  pamphlet  on  the  subject,  and  has  not 

been  excelled  for  a  clear  statement  of  the  functions  and  advantages 

of  the  trust  company,  and  of  the  differences  between  banks  and  trust 

companies. 

The  Circulars  Published  by  Various  Trust  Companies  furnish  a  good 

source   of   general   information  regarding  the   functions  they   exercise 

and  the  advantages  they  off"er. 

PROCEEDINGS,  REPORTS  AND  PERIODICALS. 

Bankers  Magazine,  The.    New  York.    Published  monthly.    $5.00  a  year. 
Has  a  Trust  Company  Department,  and  contains  numerous  notes 
and  articles  regarding  trust  companies.     Publishes  annually  the  pro- 
ceedings of  the  Trust  Company  Section  of  The  American  Bankers 
Association.     For  an  historical  study  of  the  subject,  the  files  of  this 
magazine,  which  run  back  to  1846,  are  valuable. 
Banking  Law  Journal,  The.     New  York.     Published  monthly.     <$4.00 
a  year. 

Has  a  Savings  and  Trust  Department,  gives  legal  decisions  aff'ect- 
ing  banks  and  trust  companies,  with  discussions  of  same. 
Banking  Periodk^als.     In  addition  to  those  named  here,  most  banking 

periodicals  contain  occasional  articles  relating  to  trust  companies. 
Bulletin  of  the  American  Institute  of  Banking.     New  York.     Pub- 
lished monthly.     $2.00  a  year. 

Frequently  contains  articles  on  trust  companies. 
•Commercial  and  Financial  Chronicle,  The.     New  York,     Published 
weekly.     $10.00  a  year. 

Contains  occasional  articles  on  trust  companies,  and  weekly  gives 
news  items  regarding  same.     Publishes  annually  the  proceedings  of 
The  Trust  Company  Section  of  The  American  Bankers'  Association, 
Good  for  statistics  of  New  York  trust  companies. 
Comptroller  of  the  Currency,  Reports  of  the.     Washington.     Pub- 
lished annually. 

Beginning  with  1875,  these  reports  contain  statistics  of  "Loan  and 
Trust  Companies",  and  frequently  contain  general  information  and 
discussions    regarding   same.      Each   report   gives   a   resume   of  the 
statistics  for  the  previous  years. 
Ji'oRMs    Compiled    Under    the    Supervision    of   the    Trust    Company 
Section  of  the  American  Bankers  Association.     New  York:  Pub- 
lished by  the  Association,  IPOS.  pp  30, 

Contains  about  forty  forms  for  the  use  of  trust  companies.  The 
selections  were  good,  but  some  of  the  forms  have  since  been  ma- 
terially improved  upon.  The  Section  now  keeps  at  its  office  (5 
Nassau  St.,  New  York),  a  collection  of  forms  contributed  by  its 
members. 


HIHr.KKlRAI'IIV.  459 

Law  Society,  Tiik:  Procefm)ixgs  Twkntv-Nintii  Phovintiai,  Mektixg, 
190;;.      London.  England. 

Contains,  pp  -2ti\r  to  26^,  a  paptr  on  Trusttc  Companies  by 
Robtrt  C.  Ntshitt.  Dtscribts  tht-  trust.-.-  cKuipanirs  of  Australia 
and  tlu-  Public-  Trust  Ortit-t-  of  N.-w  /t-.il.irid.  an.l  discusses  somewhat 
analoijous  institutions  in  England. 

New  Zeai.am)  Oiikim  Yeak  Book,  189S.  Pages  i'>l-i6-i  contain  a 
discussion  of  tin    Public  Trust  Oftiei-,  with  statistics. 

New  Zealand,  Statistics  of  the  COi.ow  ok,  l!)o;i.  (Jives  statistics  of 
the  Public  Trust  Office,  I8St)-l9()l. 

Printep  I'oK.Ms.  Published  by  The  Savings  Hank  S.etion  .»f  The  .Vuuri- 
can  Ha!iUers'  Association.      New  York.   1  })()(>. 

A  book  of  forms  used  by  savings  banks,  taken  from  sauipl.-s  sub- 
mitted and  used  by  nu-mb.-rs.  Contains  al>out  (JOO  forms,  arranged 
under  the  following  headings :---l)eposits,  ^^'ithdrawals,  Signature 
and  Index  Cards,  Bond  and  Mortgage  Loans,  I)ejM)sitor's  Ledgers, 
Loans,  Miscellaneous   Notices  and   Advices,   Passbooks. 

Safe  Deposit  Co.mi'Axies,  The  Leoai.  RuiiiTs  and  Dities  of.  A 
pami)Iilet  containing  the  reports  of  special  committees  of  1901  and 
19<>"»  of  The  Trust  Com])any  Section  of  The  American  Bankers 
Association.  Published  by  the  Associati.»n,  New  York,  19()'>.  Be- 
sides discussion  of  the  matters  indicat»-d  by  its  title,  the  work 
includes  practical  suggestions  as  to  rules  and  other  matters,  and 
sonic  thirty   forms. 

Savings  I^ank  Sfctiox  ok  tiik  Amkhk  ax   Bankehs  Association.  Pho- 
CEEDiNGs  OF  THE.     Published  annually  by  the  Association.  New  York. 
Contain  much   that  is  useful   for  the  savings  departnu-nts  of  trust 
com  panics. 

.State  Bankeks'  Assoc  iai  ions,  Phoc  eedixcjs  ok.  Tins.-  often  contain 
papers  regarding  trust  companits.  Tluy  an-  usually  published  in 
local  banking  periodicals. 

Stvte  Bankin(5  Dei'aktments,  Rki'okts  .»k.  In  .States  which  are  strong 
in  trust  companies,  these  reports  often  contain  instructiv.-  matter,  in 
addition  to  statistics.  Those  of  New  York  are  «-spc-cially  us«-ful.  See 
also  those  of  >L-issachusetts  and   Pennsylvani.-i. 

TiU'.sT  Companies.      New  York.     Published  ninthly.     -t.S.OO  a  year. 

A  niaga/ine  ])ublished  monthly  sinc-e  .Marcli,  19<H-,  devotc-d  ex- 
clusively to  trust  company  matt.-rs.  Contains  lending  articles  on 
variojis  subjects  of  interest  to  trust  companies,  with  news  items. 
T.'ier.-  are  many  valuable  articles  in  its  fil.-s. 

Tiu'ST  CoMTAXY  Section  ok  the  .Ameuicax  Bankehs'  Association,  Pro- 
ceedings OF  the.  Publishcci  annually  since  1S9()  by  the  Association, 
New  York. 

Contains  the  valuabh-  |)apers  .-md  addresses  d.-livered  at  th.-  meet- 
ings,   with    st.'nogr.iphie    reports    of    the    diseussions,    lists   of   nrfieers 


460  TRUST  COMPANIES. 

and  members.     The  proceedings  for  the  years  1896-1903,  inclusive, 
have  been  published  under  one  cover. 
Trust  Company  Section,  Pennsylvania  Bankers'  Association,  Pro- 
ceeuinqs  of  the. 

These  are  included  in  the  Proceedings  of  the  annual  meetings  of 
The  Pennsylvania   Bankers'  Association  since   1901. 

ARTICLES  IN  PERIODICALS. 

(NOTE. — With  a  few  exceptions,  this  list  does  not  include  articles  in  the  peri- 
odicals named  in  the  preceding  list,  for  which  their  indexes  should  be  consulted. 
An  exception  is  made  of  the  Bulletin  of  The  American  Institute  of  Banking  [re- 
ferred   to   below    as    Bulletin],    because    it   does   not   publish  an   index.) 

Advantages  of  Trust  Companies,  The.  W.  C.  Miller.  Bulletin,  Oct. 
15,  1905,  p  550. 

Australian  Trust  Companies.  C.  E.  Cowdery.  Trust  Companies,  Vol. 
II,  p   676. 

Banks,  The,  and  the  Trust  Companies.  The  Nation,  Vol.  LXXIV, 
pp  36^2-3,  May  8,  1902;  Vol.  LXXXII,  p  132,  Feb.  15,  1906. 
(Editorials.) 

Bonds  as  Investment  Securities.  Annals  of  The  American  Academy 
of  Political  and  Social  Science,  Vol.  XXX,  pp  193-427. 

A  group  of  papers  under  the  following  headings: — The  Proper 
Basis  for  Bond  Accounts  When  Held  for  Investment,  by  Charles 
E.  Sprague;  The  Valuation  of  Bonds  on  an  Income  Basis,  by  Charles 
E.  Sprague;  Bond  Redemption  and  Sinking  Funds,  by  C.  M.  Keys; 
The  Value  of  a  Bond  Department  to  a  Bank  or  Trust  Company,  by 
George  B.  Caldwell ;  Tables  of  Bond  Values — Theory  and  Use,  by 
Montgomery  Rollins:  Essential  Recitals  in  the  Various  Kinds  of 
Bonds,  by  Andrew  Squire;  Organization  and  ^Management  of  a  Bond 
House,  by  William  Foley;  Bond  Salesmanship,  by  William  Foley; 
Selling  American  Bonds  in  Europe,  by  Charles  F.  Speare;  Methods 
of  Accounting  and  Auditing  in  a  Bond  House,  by  Charles  S.  Ludlam; 
Bonds  as  Additional  Banking  Reserve,  by  William  C.  Cornwell; 
Railroad  Bonds  as  an  Investment  Security,  by  Floyd  W.  INIundy; 
Electric  Interurban  Railway  Bonds  as  Investments,  by  Edgar  Van 
Deusen;  Real  Estate  Bonds  as  an  Investment  Security,  by  George 
A.  Hurd;  Industrial  Bonds  as  an  Investment,  by  Lyman  Spitzer; 
The  Physical  Condition  of  a  Municipality  Issuing  Bonds,  by  Harry 
E.  Weil;  Municipal  Bond  Issues  Explained,  by  Harry  E.  W^eil; 
Protection  of  Municipal  Bonds,  by  Park  Terrell;  Classification  and 
Description  of  Bonds,  by  F.  A.  Cleveland;  Bonds  in  Their  Relation 
to  Corporation  Finance,  by  F.  A.  Cleveland. 

Control  and  Supervision  of  Trust  Companies^  The.  Frederick  D. 
Kilburn.  Annals  of  the  American  Academy  of  Political  and  Social 
Science,  Vol.  XXIV,  pp  27-42.     July,  1904. 


BIBIJOGRAPHY.  46l 

Definition   and   Historv  of  Trust  Companies,   The.     Clay  Herrick. 

Banking    Law    Journal,    V'ol.    XX,    p    3i9.       (May,    1903.)      Same 

article.  Bulletin,  July  1,  1903,  p  8. 
Details  of  a  Thust  Company's  Bcsinkss,  A  Few.     W.ilt< t  I*.  McCoinas. 

Bulletin,  May   15,   1903,  p  8. 
Federal  Supervision  of  Trust  Companies.    David  R.  Carson.    Bulletin, 

Sept.   15,  1905,  p  421. 
Government  Control  of  Banks  and  Trust  Companies.     William  Bar- 
rett   Ridgely.      Annals   of   the   American    Academy   of    Political   and 

Social  Science,  Vol.  X\IV,  pp  15--26.     July,  1901. 
Growth  of  Trust  Companies.     Alfred  M.  Barrett.     Bulletin,  .Fanuary, 

1906,  p  25. 
Growth  of  Tri'st  Compa.mes.     Charles   .\.   Conant.     American   Review 

of  Reviews,  Vol.   XXVI,  p  571.     November,   1902.      (Reprinted  in 

Conant'.s  "Wall  Street  and  The  Country.") 
Growth,   Remarkable,   of    American    Banks   and    Trust    Companies. 

S.  S.  Pratt.     Indej)endent,  Vol.  LIX,  pp  1154-67.     Dec.  21,  1905. 
How  A  Trust  Company  Makes  Its  Money.     T.  W.  Lamont.     Bulletin, 

May  15,  1905,  p  1327. 
Illinois  Trust  Companies.     ^^'.  K.  Milkr.     Hullttiu.  Sept.   1.  1001.  p. 

377. 
Joint  Account,  Legal  Aspects  of  Payment  to  Survivor  of.     Thomas 

B.    Paton.       Proceedings    Savings    Bank    Section    of    tlu-    American 

Bankers'  Association,  1906. 
Knukfrbocker  Trttst  Co.  Suspension.    See  "UNLOCKING  $47,000,- 

000."     Harper's  Weekly,  Vol.  LII,  pp  8-9.  April  11,  1908. 
Legal  Responsumi.itiks  of  Trustees  Under  Corporation   Bonds   and 

Mortgages  or  Deeds  of  Trust.     Robert  Ludlow  r\»wltr.     Auurican 

Law  Review,  Vol.  XX IW  pp  703-726. 

Modern  Trust  COmcwv.  A.     ^y.   V.   Mackay.     Bulletin,  Dec.   1,   1904, 

p  693. 
Nature   and  the   Field   of   Trust  Companies.   Thk.      \^.>^h^  s   \Nork. 

August,  1902,  Vol.  IV,  pp  2463-5. 
Public's  Stake  in  the  Trust  Companies,  Thk.     World's  Work,  .him  . 

1905,  Vol.  X.  pp  6237-9. 
PiHi.u     TiMsTKK,    TiiK.       Henry    D.    Ll(\vd.      Currrnt    Literature.    Vol. 

XXIX,    pp    671-2.       December,    1J)0().       (Subdivision    of    article    on 

Some   New  Zealand  Experiments.) 
Public  Trustee,  The.     E.  K.  Allen.   Niii.temth  rintury.  \'oI.   I.XIII. 

pp  297-301.     February,  1908. 
Puni.ic  Trustee,  Some  Commfnts  on  the.     William  Schooling.     Nine- 
teenth Century.  \'oI.  I  XFFF.  pp  ifv'. -^:.-..     \Fir.li    loos. 


462  TRUST  COMPANIES. 

Relation  of  Trusi  Companies  to  Banks,  The.  J.  Barton  Townsend.. 
Bulletin,  Sept.  1,  1904,  p  373. 

Relation  of  Trust  Companies  to  Industrial  Combinations,  as  Illus- 
trated BY  The  United  States  Shipbuilding  Co.  L.  Walter 
Sammis.  Annals  of  the  American  Academy  of  Political  and  Social 
Science,  Vol.  XXIV,  pp  239-270.     July,  1901. 

Reserves  of  Trust  Companies.  Festus  J.  Wade.  Bulletin,  Oct.  15,^ 
1901,  p  521. 

Safeguarding  the  Trust  Companies.  C.  M.  Keys.  World's  Worky 
February,  1908,  Vol.  XV,  pp  9907-9912. 

Stock  Transfers.     James  S.  Carr.     Bulletin,  April  1,  1903,  p  10. 

Supervision  of  Trust  Companies.     World's  Work,  November,  1904,  Vol. 

IX,  pp  5457-8. 
Title  Insurance.     J.  Smith  Christy.     Bulletin,  June  1,  1905,  p  23. 

Trust  Accounts  in  Savings  Banks.  William  Hanhart.  Proceedings 
Savings  Bank  Section  of  the  American  Bankers'  Association,  1903. 

Trust  and  Title  Insurance  Companies.  Thomas  Leaming,  Lippin- 
cott's  Magazine,  Vol.  XLII,  pp  S;'/i-893,  December,  1888.  (An 
early  view.) 

Trust  Companies.     W.  F.  Mackay.     By.]{f?tin,  Aug.  1,  1905,  p  266. 

Trust  Companies:  Is  There  Danger   in  the  System?     A.   D.   Noyes» 

Political  Science  Quarterly,  Vol.  XVI,  pp  248-261.     June,  1901. 
Trust  Companies.     Chas.  E.  WiUock.     Bulletin,  March  1,  1903,  p  7. 

Trust  Companies.  Guy  Morrison  Walker.  A  pamphlet  published  by 
Moore,  Baker  &  Co.,  Boston,  19(''  '~'ontains  a  discussion  of  the 
earning  power  of  trust  companies,  ;:  *^''!'     'asons  for  their  growth. 

Trust  Companies  and  the  Clearik  ^^ouse.  Horace  White.  The 
Nation,  Feb.  12,  1903,  Vol.  LXX'^,!jl,  p  126. 

Trust  Companies  and  the  Panic.  .William  Justus  Boies.  American 
Review  of  Reviews,  December,  1907,  Vol.  XXXVI,  pp  680-83. 

Trust  Comp\nies  and  Reserves.  A.  S.  Frissell.  Annals  of  the  Ameri- 
can Academy  of  Political  and  Social  Science,  Vol.  XXXI,  p  463. 

Trust  Companies  and  Their  Functions.  Samuel  ]M.  Hahn.  Bulletin,. 
July  1,  1902,  p  10;  July,  15,  1902,  p  11. 

Trust  Companies:  Their  Organization,  Growth  and  ]\Ianagement. 
Clay  Herrick.  Bankers  INIagazine,  1904-1907,  inch  Vols.  LXVIII- 
LXXV. 

Trust  Company  Association  of  the  State  of  New  York,  The.  The 
Banking  Law  Journal,  Vol.  XXI,  pp  419-20. 

Trust  Company,  The.     Arthur  H.  Coolcy.     Bulletin,  Feb.  15,  1903,  p  9. 

Trust  Company,  The.  Charles  AV.  Stevenson.  The  Bankers'  [Monthly, 
July,  August,  September  and  October,  1903,  Vol.  XXV. 


BIBLIOGKAI'UV.  463 

Trust  Company  of  To-Day,  The.  Virgil  M.  Harris.  The  Banking  Law 
Journal,  February,  1905,  Vol.  XXII,  pp  97-101. 

Tut'ST  Estate  Max  vfJF.MKNT.  Joliii  W.  Marshall.  Bulletin,  January, 
1909,  p  51. 

Trlst  Estates.     H.  B.  Loud,     Bulletin,  October,  190(i,  p  1018. 

WonKiKG  Force  of  a  Trlst  Company,  The.  Albert  S.  Abbott.  Bul- 
letin, Jan.  1,  190r..  p  8t>y. 

Working  For(  e  of  a  Trist  Company,  The.  Geo.  D.  Sears.  Bulletin, 
Dee.  15,  190.1-,  p  ?()'(). 

HANKINCi,   TKCIINICAL   AND   GENERAL. 

(Most  tiu.«;t  eompanlt's  do  either  a  savings  or  commercial  banking  business,  or 
both,  and  a  thorough  understanding  of  trust  companies  Involves  an  understand- 
ing of  the  principles  and  practice.s  of  banking  and  of  financial  matters  in  general. 
In  these  fields  the  number  of  books  is  quite  large,  and  only  a  few  are  included 
here.) 

A.  B.  C.  OF  Banks  anu  Bankinc;,  The.     George  M.  Coffin.     New  York: 
S.  A.  Nelson,  1903.    pp  136. 

Explains  banking  theory  and  })racticc  in  a  simple  way. 
A.  B.  C.  OF  Stock  Specilati,   ;,  The.     New  York:  S.  A.  Nelson,  1903. 
pp  232. 

Useful    for   an    underst       ling   of    current    methods   of  dealing    in 
stocks. 
A,  B.  C.  OF  Wall  .Street.  The.     Edited  by  S.  A.  Nelson.     New  York: 
S.  A.   Nelson,   1900.      pp   l6i. 

E.xplains   methods   of   trading,   and    gives   general    information    as 
indicated  by  title.     Include? '•i  dictionary  of  Wall  Street  terms. 
AccorNT.\\(Y    OF    Invest.\  The.      Charles    Ezra    Sprague.      New 

York,  190I'.     pj)  9:5. 

Includes  a  treatise  on   ct      ,)ound    interest,  annuities,  .imortiz.ition 
and  the  valuation  of  securiti  s.      Discusses  theory  of  accounts,  their 
form  and  application  to  different  kinds  of  investments. 
American  Law  Relating  to  Income  A\n  Principal,  The.     Edwin  A. 
Howes,  Jr.     Boston,  1.005.  pp  101. 

Discusses  the  legal  rules  for  the  guidance  of  trustees  in  separating 
funds  derived  from  investments  into  income  and  principal. 
Bank  Systems.     Boston:  Library  Bureau,  1901.     pp  40. 

Practical  accounting  systems  for  trust  companies  and  other  banks. 
Care  of  Estates,  The.     Frederick  Trevor  Hill.     New  York,  1901.     pp 
176. 

Practical   questions   regarding  tln'   rights,  duties  and   liabilities  of 
fiduciaries. 
Clearing    Hoises:    Their     History,    MnTHons    and    Administration. 
James  G.  Cannon.     New  York:  D.  .Vpjileton  Ct  Co.,  190O.     pj)  383. 
A  standard  work  on  the  subject. 


464  TRUST  COMPANIES. 

CoRPOuATioN  Finance.     Thomas  I..  Greene.     New  York. 

A   study   of  the   principles   and   metliods   of   management   of  the 
finances  of  corporations  in  the  United  States^  with  special  reference 
to  the  valuation  of  corporation  securities. 
Foreign  Exchange.     New  York:     The  Financier  Co.,  1902.     pp  184. 

Reprint  of  a  series  of  articles  treating  the  subject  in  an  element- 
ary way. 
Funds  and  Their  Uses.     F.  A.  Cleveland.     New  York:  D.  Appleton  & 
Co.,  1902.     pp  297. 

Describes  the  methods,  instruments  and  institutions   employed  in 
modern  financial  transactions.     Illustrated. 
History  of  Banking  in  the  United  States,  A.     John  J.  Knox.     New 
York:     The  Bankers'  Publishing  Co.,  190S.     pp  902. 

Gives  the  history  of  banking  in  the  United  States,  with  sketches 
of   banking  in  each   of  the   States.      Makes   some  mention   of   trust 
companies. 
History  of  Savings  Banks  in  the  United  States.     Emerson  W.  Keyes. 
New  York:  Bradford  Rhodes  &  Co.,  1876.     Vol.  I,  pp  438. 
Considers  the  subject  in  a  general  way  and  by  States. 
Internationai.    Exchange.      Anthony    W.    Margraff.      Chicago,    1904. 
pp  SOO. 

A    practical    work    on    the    foreign    banking    department    and    its 
administration  by  American  bankers. 
Laws  of  the  States,  The,  relating  to  trust  companies. 

In  many  States  the  banking  laws,  including  those  relating  to  trust 
companies,  are  printed  in  separate  pamphlets.    They  may  be  obtained 
from  the  State  banking  department,  if  any,  or  from   the   Secretary 
of  State. 
Methods  and  INIachinery  of  Practical  Banking.     Claudius  B.  Patten. 
New  York:     Bankers'  Publishing  Co.,  ninth  edition,  1901.     pp  520. 
Originally  published   in   1891    and  revised  to   date.     Treats   in   a 
very  interesting  and  instructive  way  of  the  practical  details  of  the 
<i         business,  with  illustrations. 

JModern  Bank,  The.     Amos  Kidder  Fiske.     New  York:  D.  Appleton  & 
Co.,  1.905.     pp  S48. 

Discusses  principles  and  details  of  work,  with  forms  and  explana- 
tions.     Has   a   brief   chapter    (No.    28)    on   State    banks    and   trust 
companies. 
Modern    Banking    Methods.      Albert    R.    Barrett.      New    York:    The 
Bankers'  Publishing  Co.,  1902.     pp  320. 

Treats   in   detail  of  the  various   departments   of   National  banks, 
methods   of  working,   bookkeeping,   etc.,   with   numerous   forms   and 
illustrations. 
jModern  Business  Corporations.     William   Allen  Wood.     Indianapolis: 
The  Bobbs-Merrill  Co.,  1906. 


BIlU.KXiR.U'HV.  465 

Defines   corpor.-itions,   explains   tlu-ir   legal   status,   formation   and 
organization,    ottieers,    ca|)ital    stock    and    bonds,    accounting,    forms 
used.     With  a  bibliogr.ajjliy  on  corporations. 
Money  axd  B.\NKrx(;.     Horace  \N'liite.     Boston:  Ginn  &  Co.,  IDOJ.     pp 
4C7. 

Treats    of    tin    tlnory   and    principlrs   (if   nionry    and   of   banking, 
M-ith  historical  sketches  and  descriptions  of  American  banking  insti- 
tutions, aiul  of  foreign  banking  systems. 
Money  an»  Investmen'is.     Montgomery   Rollins.      H()st<)n:   l);ina   Estes 
&  Co.,  1907.    l)p  yMi 

An  cncyelopfdic-  dietionary   of  fiii.iiu'ial   trnns. 
National   Ba.nk   Act,  The.      ^^'asllington :   Ciovcnmuiit    Printing  Oliice. 
Contains  the  laws  relating  to   National  banks.     Chapter  IX  gives 
the  laws  governing  trust  companies  in  the  District  of  Columbia. 
Newest  England.     Henry  1).  I.loyd.  New  York,  190O. 

Under  Chapter  II,  pp  ]'-i-:5{),  is  given  a  descri])tion  of  the  Public 
Trustee  of  New  Zealand. 
PiiACTicAL    Bankincj.      Albert    S.    Bolles.      New    York,    18<)'2.      Eighth 
edition. 

Besides    discussion    of    banking    principles    and    methods,    gives    a 
brief  sketch  of  loan  and  trust  companies,  pp  ii81-i289. 
Practical   Phohlems  in   Bankinc^   and   Currency.      Edited  by   Walter 
Henry  Hull.     New  York:  The  MacMillan  Co.,  1907.     pp  596. 

Under  the  Trust  Comj)any  Section,  pp    1-.57-58.5,  are  included  re- 
prints of  a  number  of  the  |)apers  read  at  the  meetings  of  The  Trust 
Company     Section     of     The     Ameriean     Hankers'     Association     and 
elsewhere. 
Principles  and  Practice  of  Einance.     Edward  Carroll,  Jr. 

A  practical  guide  for  bankers  and  others.     Summary  of  State  and 
National  banking  laws,  li-gal  rates  of  interest,  glossary  of  conuner- 
eial  and  financial  terms. 
Principles  of  Banking,  The.     Cliarlrs  A.  Con.int.     New  York:  Harper  » 
and  Bros.,  1908.     pp   J-88. 

This  is  the  second  part  of  the  author's  work  on  The  Principles  of 
Money  and  Banking.     Discusses  the  theory  and  history  of  Iwinking, 
curr«'ncy,  reserves,  evolution  of  commercial  banking,  crises. 
Savings    and    Savings    Institutions.      James    Henry    Hamilton.       New 
York:  The  MacMillan  Co.,  190^2.     pp  4-28. 

Explains  the   theory,  IxMiefits  and  educational  asjiects  of  savings. 

Discusses    difl'erciit    kinds    of    savings    institutions,    including    j>ostal 

savings  banks.     With  a  bibliography. 

State   Bankin(:    in   the    United   States   Since   the    Passage    of   thk 

National   Bank   Act,     George  E.   Barnett.      Biltinu^re:      The   Johns 

Hopkins  Press,  1902,     pp  117- 


466  TRUST  COMPANIES. 

One  of  the  Johns  Hopkins   University  Studies.      Treats  the  sub- 
ject from  the  economic  standpoint. 
Theory  and  History  of  Banking,  The.     Charles  F.   Dunbar.     New 
York:  G.  P.  Putnam's  Sons,  1891.     Revised  edition,  1904. 

Explains  the  theory  of  banking  operations,  and  sketches  the  prin- 
cipal foreign  banks  and  the  National  banks  of  the  United  States. 
Trust  Finance.     Edward  S.  Meade.     New  York:  D.  Appleton  &  Co., 
1907.     pp  387. 

A  study  of  the  genesis,  organization  and  management  of  industrial 

corporations.     Origin,  methods,  promotion,  sale  of  stock,  U.  S.  Steel 

Corporation,  capitalization,  suggestions   for  reform  and  legislation. 

Trustee's   Handbook,   A.     Augustus   Peabody   Loring.      Boston,   1900. 

pp  191. 

States  the  rules   governing  the  management  of  trust  estates  and 
the  relationship  between  trustees  and  beneficiaries. 
Wall  Street  and  the  Country.     Charles  A.  Conant.    New  York:  G.  P. 
Putnam's  Sons,  1904.     pp  247. 

Chapter  VI,  pp  205-235,  The  Growth  of  Trust  Companies. 
Work  of  Wall  Street,  The.     Sereno  S.  Pratt.     New  York:  D.  Apple- 
ton  &  Co.,  1903.     pp  286. 

ExjDlains  the  subject  in  theory  and  practical  detail  with  clearness 
and  interest.  Specially  valuable  for  an  understanding  of  financial 
methods. 


GENERAL   INDEX. 


•  References  are  lo  paces.     See  aUo  Index  of  Kormsi 

Accoimtin<;,  system  of 17-^,  3^5 

Accounts,  opening  of '250,  340 

Administrator.  dcHnition  of.  ,'?7;  duties  of.  l.iS;  power  to  act 

as     79 

Advantages   of   trust   companies 3'2.  45 

Advertising,  cliapter  XIII 379 

Advertising  campaign,  382;  copy,  j)re))aration  of.  ;{<>*2 ;   for 
trust   business,  390;   manager,    170;   mi-diums   of,  384; 

reasons    for    379 

Agency  houses  in  India K  i44 

Agent  for  cor]iorations,  business  as 41 

Alabama,  28  ;  trust  company  laws  of 90 

American    Institute   of   Banking,   The 404 

Arizona,  28;  trust  company  laws  of 91 

Arkansas,  28  ;  trust  company  laws  of 91 

Assignee,  duties  of,  40;  fees  as K)7 

Attorney  of  company 171 

Audits   (sec  Chapter  XIV).  39");  |)urposc  of,  39<);  auditing 

department.  399;  duties  of  auditor 171 

Australian  trustee  companies H4 

Babcock,   Philip  S.,  quoted n9 

Baltimore    12 

Bangs,  Francis  S 3 

Bank  of  England 15 

Bankers    Magazine,    (jiiot. d 7.9.  H.  12.  13.  14,  l.'>.31.32 

Bankers    Monthly,   quoted 32 

Banking    by    mail HO 

l^mking  departujent,  forms  and  records  for.  (  li.ij)t«T  IX.  .  .  2  t9 

Hanking  ))owcrs  of  trust  companies SI 

Banks  and  trust  companies,  comparative  growth  of.  1}>:  com- 
parison of.  47;  competition   betw«-en 14 

Barnett.  George  E..  quoted l6 

Bibliography    ^•''7 

Bills  discounted 317 

lioard    of    directors    or    trustees .'>9.  6().  7''.  3S7 

Bond  issues,  duties  and  liabilities  as  trustee  under JJS 

Bond  trusts,  forms  for,  209;  recpiisitcs  in  accvpting ^."!'? 

lio.)kkeepers.    duti«s    of I(i7.  n)9 

Boston     9.11.1^ 

Jioston  ledger.  2()7 ;  for  general  accounts.  .  289 

Boston  Safe  Deposit  and  Trust  Company.  .  11 


468  GENERAL  INDEX. 

PAGE 

Bowdoin,   Henry   J.,   quoted 419,  425 

Bradstreet's,  quoted    22,  23 

Branch    banking    409 

Brooklyn  (N.  Y.)  Trust  Company 11,  13 

Buenos  Ayres,  trust  companies  in 454 

Buildings   and   offices 410,  411 

By-laws    58 

California,  20,  28  ;  trust  company  laws  of 92 

California  Safe  Deposit  and  Trust  Company 24 

Camden  Safe  Deposit  and  Trust  Company 11 

CajDital  stock 75,  84 

Canadian  trust  companies 451 

Cape  Colony,  Trustee  and  Executor  companies  in 444 

Card  records    174,  200,  250,  351 

Cator,  George,  quoted    2,  6.  8,  10,  14,  15 

Certificates  of  deposit 330 

Certified  checks 332 

Charter,    special    68, 72 

Checks,  forms  of,  253  ;  voucher 255 

Chicago 12,  17 

Chicago  Fidelity  Safe  Depository 12 

Chicago  Loan  &  Trust  Company 8 

Chicago    Tribune     17 

Chief  clerk,  duties   of 166 

Cincinnati,  12  ;  Cincinnati  ledger 271 

Cities,  number  and  resources  of  trust  comjDanies  in  the  larger.  29,  30 

Civil  War,  8;  organization  of  trust  companies  after 10,  30,  31 

Clearance  clerks,  duties  of 167 

Clearing   checks    324 

Collections    325 

Colorado,  28  ;  trust  company  laws  of 93 

Commercial  and  Financial  Chronicle,  quoted 13,  14 

ComjDarative  growth  of  banks  and  ti'ust  companies 19 

Comptroller  of  the  Currency,  quoted,  9,  13,  14,  17,  19,  20; 

reports  of l6 

Connecticut     11,  14,  17,  28 

Connecticut,  Bank  Commissioners  of,  14;  trust  company  laws 

of ' 95 

Connecticut  Trust  &  Safe  Deposit  Companj^,  Hartford 11 

Conservator,  duties  of 441 

Corporations  division  of  trust  department,  The 33,  185,  199 

Coupon  clerk,  l68  ;  ledger  and  record,  189;  record 215 

Coupons,  handling  of,  218;  payment  of 436 

Cremation  of  securities 211 

Customers,  forms  for  the  use  of,  250,  344;  treatment  of .  .  .  .  389 

Cuba,  trust  companies  in 453 


GEXERAI.  JNDKX.                          *  ^^jj 

Daily  statement ^,„^ 

Delaware,  28;  trust  eompany  laws  of '  "  '  *Qg 

Departments  of  trust   eompanies .33 

Depositary  under  reorfjanization  plans,  duties  as 437 

Deposit   with    state '^_ 

D.posits  of  banks  and  of  trust  eompanies,  table  showing,  -Jo; 

eliart    

Diputy,  safe  deposit,  appointment  of ...^g 

Development  of  trust  companies ~j  ,j 

Directors,  selection  of,  66;  numlxr  r<(,uired,  75;  as  sources 

of    business    ^og 

Discount  powers    „., 

District  of  Columbia.  -2S;  trust  company  laws  of 97 

Duties  of  trust  companies  actin^r  i„  various  capacities.  Chan- 
ter XVI    '  ^,3 

Double  liability  of  stockholders j-5 

Earning  power  of  trust  companies,  sources  of 52 

Employees,    qualifications    of.    402;    duties    «.f    the    various. 

Chapter  VI,  l62;  selection  and  treatmoit  of u)0.  40.S 

England  and  Scotland,  trust  companies  in 455 

Escrows   ,3- 

Estates  division  of  the  trust  department IS.").  ][)0.  220 

Europe    3. 

European  countri»s,   trust  companies   in 456 

Examinations,  legal  requirements  for,  SS;  discussion  of,  .-iy.j; 

various    kinds     .jn-j 

Examining  conmiittee    gl 

Executive  conmiittee    gQ 

Executor,  definition  of,  :i~ ;  duties  of,  kJS;  pow«r  to  act  as.  .  79 

Exj)ense   records    ^^^ 

Express  packages,  record  of 218 

I'ailures  of  various  classes  of  financial  institutions -22 

Farmers'  Eire  Insurance  &  Loan   Company 2.  >{.  1 

Farmers'  Loan  &  Trust  Company J.  (J.  9 

Fees,  problem  of  determining,  iO.) ;  as  executor,  adminis- 
trator, guardian,  4()();  as  assignee  and  receiver,  K)7;  as 
trustee  under  bond  issues,  407;    as  transfer  agent,  40S : 

for  car«'  of  estates,  407;  ledger  for jl8 

Fidelity    insurance     44,  si 

Fidelity   Trust   Company.    Philadelphia 11 

Financing  and  reorganizlion  of  corporations 43 

Florida,  2S  ;  trust  company  laws  of 98 

Foreign  countries,  trust  eomi)anies  in.  Chapter  XN'II 444 

Foreign   exchange    408 

Formative  period,  trust  companies  still  in 53 

Free  Banking  Law  in  New  York 7 


470 


GENERAL  INDEX. 


PAGE 

Freedman's  Savings  &  Trust  Company 12 

Functions  of  trust  companies,  1 ;  Chapter  II 33 

Gage,   Lyman   J 8 

General  books,  283  ;  general  bookkeeper 167 

General  statutes  relating  to  trust  comjDanies l6 

Georgia,  10,  28;  trust  company  laws  of 98 

Girard  Life  Insurance,  Annuity  &  Trust  Company 5 

Girard  Trust  Company    6 

Greene,   Charles  A.,  quoted 419 

Greene,  Frank 23 

Greene,   Thomas   L.,  quoted    435 

Growth  of  trust  companies,  l6;  charts  showing,  18;  causes  of.  31 

Guarantee  &  Investment  Association,  Chicago 12 

Guardian,  duties  of,  441 ;  power  to  act  as 79 

Hartford   12 

Hartford  Trust  Company 11 

Hawaii,  28;  trust  companies  in,  453;  trust  comjDany  laws  of.  99 
History  of  the  trust  company  movement  in  the  United  States, 

Chapter    I    1 

Idaho,  28;  trust  company  laws  of 100 

Illinois,  10,  16,  28;  early  trust  companies  in,  8;  trust  com- 
pany  laws    of 102 

Illinois  Trust  &  Savings  Bank,  Chicago 11 

Incorporation  of  trust  companies,  55;  in  various  states,  (see 

Chapter  V)    90 

Increasing  business,  methods  of.  Chapter  XIII 379 

Indian  Territory 28 

Indiana,  28  ;  trust  company  laws  of 103 

Individual  books    265 

Individual  deposits,  growth  of,  19;  chart  showing 21 

Individual  trusts,  nature  and  variety  of 34 

Industrial  Bank  of  Japan 454 

Insolvency   business    40 

Interest  on   checking  accounts 276 

Investment  of  trust  funds 442 

Investment  business,  38 ;  records 220,  321 

Iowa,  10,  28 ;  trust  company  laws  of 104 

Jackson,  President    8 

Japan,  trust  companies  in 454 

Joint  tenants  of  safe  deposit  box 237 

Jones,  Breckenridge   12,  48 

Journals,  individual,  270;  general,  284;  savings,  348;  trust.  182,  190,  197 

Judah,  Noble  B 427 

Kansas,  20,  28 ;  trust  company  laws  of 105 

Kentucky,  20,  28;  trust  company  laws  of 106 

Kentucky    Trust    Company 7 


GENERAL  INDEX.  471 

PAGE 

King,  Willard  V.,  quoted 427 

Knickerbocker   Trust  Company,    New    York 24 

Knox,  John  J.,  Comptroller,  quoted 13 

Labor  saving  devices j  t').  108 

Laws    of    the    various    states    relating    to    trust    companies. 

Chapter  V    yO 

Lawyers  and  trust  companies 52,  392 

Ledgers  for  general  accounts,  ii84;  for  individual  accounts, 

'267;  for  savings  accounts,  350;  for  trust  accounts 181.  193 

Legislation,  trust  company,  Chapter  IV 74 

Letters  of  remittance,  etc 326 

Liabilities  of  trust  comi)anies  acting  in  various  capacities.  .  .  413 

Life   insurance  companies 9,  10 

Life  insurance  trusts 36 

Lincoln,    President    8 

Loan  clerk,  duties  of,  I()5  ;  loan  departnunt 292 

Loans,   restrictions    regarding 86 

Loose-leaf  books    1 73,  190 

Louisiana,  28;  trust  company  laws  of 107 

Mail,  banking  by 410 

Maine,  28  ;  trust  company  laws  of 109 

Managers  bond,  safe  deposit  and  real  estate  departments.  .  .  170 

Maryland,  10,  28;  trust  company  laws  of Ill 

jNIassachusetts,  11,  17,  28;  trust  company  laws  of Ill 

^L'lssachusetts  Trust  Co.,  IJoston II 

Merchants'  Loan  &  Trust  Company,  Chicago 8 

Mexico,  trust  companies  in 1.''3 

Michigan,  28;  trust  company  laws  of 115 

Miimesota,  28;  trust  company  laws  of 1  l6 

Miscellaneous  functions  of  trust  companies ;j1 

Mississippi,  28;  trust  company  laws  of 117 

Missouri,  15,  28;  trust  com])any  laws  of Ill' 

Montana,  28;  trust  company  laws  of 120 

Morris,  C.  F.,  quoted H6 

Mortgage  deed,   form  of •'^09 

Mortgage  loans    ^^03 

National  banks,  l(j,  21;  growth  of  deposits,  1>),  20.  21  ;  num- 
ber in  1875,  17;  suspensions  of 22,  23 

National  Park   Hank,   New  York 12 

National  Trust  Company,  New  York 11.13 

Nebraska,  28  ;  trust  company  laws  of 122 

Nevada,  28;  trust  company  laws  of 122 

New   accounts   clerk 1^' 

New   England   States 

New  England  Trust  Company,  Boston 1 1 

New  Hampshire,  28;  trust  company  laws  of 122 


10 


472 


GENERAL  INDEX. 


PAGE3 

New  Jersey,  10,  28;  trust  company  laws  of .  . 123 

New  Mexico,  28  ;  trust  company  laws  of 126 

New  York,  10,  11,  12,  13,  16,  17,  26,  28,  29,  65;  Bank  Sup- 
erintendent of,  13,  14,  15,  16,  24;  early  trust  companies 
in,  2,  9;  incorporation  of  trust  companies  in,  55;  powers 
of  trust  companies  in,  77 ;  trust  company  failures  in,  24 ; 
trust  company  laws  of 

New  York  Guaranty  &  Indemnity  Company 

New  York  Life  Insurance  &  Trust  Company 

New  York  Mercantile  &  Trust  Company 

New  Zealand  Public  Trust  Office 

North  American  Trust  &  Banking  Company,  New  York.  .  .  . 

North  Carolina,  28;  trust  company  laws  of 

North  Dakota,  28 ;  trust  company  laws  of 

Northern  Trust  Company,  Philadelphia 

Number  of  trust  companies,  16,  17,  18,  19;  in  various  states, 
28 ;  in  various  cities 

Officers    and    employees 

Officers,  duties  of  the  various 

Offices   and   buildings 

Official  checks 

Ohio,  20,  28 ;  trust  company  laws  of 

Ohio  Life  Insurance  &  Trust  Company,  Cincinnati 

Oklahoma,  28 ;  trust  company  laws  of 

Old  Colony  Trust  Company,  Boston,  stock  transfer  rules  of. 

Opening  accounts    

Oregon,  28 ;  trust  company  laws  of 

Organization  of  trust  companies.  Chapter  III 

Panic  of  1907 

Pass-books,  commercial,  251 ;  savings, 

Pennsylvania,  10,  11,  15,  l6,  17,  28,  29;  trust  company  laws 
of ^ 

Pennsylvania  Company  for  Insurance  on  Lives  and  Granting 
Annuities    

Perry,   Ross,  quoted    

"Pet  banks" 

Philadelphia,  9,  12,  13;  first  trust  company  in 

Porto  Rico,  trust  companies  in 

Powers  of  trust  companies,  76;  in  New  York 

Private  banks,  suspensions  of 

Probate  business,  37;  Probate  claim  docket,  227;  Probate  set- 
tlement docket   

Proceedings  Trust  Company  Section,  American  Bankers'  As- 
sociation  (See  Trust  Company  Section) 

Proofs,  bookkeepers',  266;  tellers' 260 

Provident  Life  &  Trust  Company,  Philadelphia 10 


128 

11 

,  6,  9, 10 

11 

449 

7 

133 

134 

11 

29 
61 

162 

410,389 

327 

136 

7 

138 

422 

250,  340 

141 

54 

24 

344 

142 

4,5,6 

417 

8 

4 

453 

77 

22,23 

181 


(.km: HAL  INDEX.  173 

PAGE 

Racktmanii,  Felix,  (luottd i-*{\,  i^o 

Real  estate  business,  K);  trust  eonipany  holdings  of,  80;  real 

estate    mortgage    loans,    303;    real    estate    department, 

Chapter  XI    ;;;,(j 

Real  Estate  Eoan  &  Trust  Company,  Cliicago 8 

Receiver,  duties  of ; U) 

Records,  remarks  concerning 1  7'2 

Registering  trusts    1  75 

Registered  mail  and  express,  record  of -21$ 

Registrar  of  stock,  V2;  duties  and  liabilities  as 4'i5 

Regulation  of  trust  companies,  st  itutory S3,  89 

Rents,  record  of -i-iS 

Reorganization  and  financing 13 

Reports    S8 

Reserves  of  trust  ct)mpanies 26,  '2~.  S6 

Resources  and  liabilities  of  trust  companies,  1 875-1  y08 25.  '26 

Rhode  Island,  17,  -28;  trust  company  laws  of 1  U 

Rhode  Island  Hospital  Trust  Company,  Providence 10 

Rollins,  Jordan  J H  6 

Safe    deposit    business,    1'),    81,    170;    department.    Chapter 

VIII ; 2;Jt 

Safe  deposit  companies,  early 11 

Safe  Deposit  Company,  New  York 11 

Safe  Deposit  &  Trust  Company,  Baltimore 11 

Safe  Deposit  &  Trust  Company,  Pittsburg 10 

Savings  banks,  iil  ;  growth  of  deposits,  19,  20,  -21  ;  number  in 

1830,  9;    in  187"),  17;    suspensions  of,  2-2,  23;    progress 

relative  to  that  of  trust  companies :) 

Savings  department.  Chapter  X :H0 

Scotland  and  England,  trust  companies  in i55 

Secretary  and  Treasurer,  duties  of l63 

Securities,  records  of J-iO.  .■^21 

South  Carolina,  2B;  trust  company  laws  of 1  id 

South  Dakota,  28  ;  trust  company  laws  of MO 

State  banks,  -2i;  growth  of  deposits,  19.  21  ;  number  in  187'). 

1 7 ;  suspensions  of 22.  23 

State  regulation   (see  Chapter   IV) 2i 

Statement  of  accounts -SO 

States,  statistics  of  trust  com})anies  in 28.  30 

Statistics  of  trust  companies,  1()-.'J0;  tables  of 25.  26 

Stevenson,  Charles  W.,  quoted ■<2 

Stewart,  John  A S 

Stock,  duties  and  liabilities  of  registrar  of.  i2.'> ;  of  agent  for 

transfers  of,  US;  rules  for  issue  and  transfer  of 122 

Stock  ledgers,  209 ;  registers 206 

Stockholders 38.  388 


474  GENERAL  INDEX. 

PAGE 

Stonc^  Ralph,  quoted 2 

Stop  payments  on  checks 282 

Storage  department 244 

Sumner,  Charles 12 

Sundr}^  topics,  Chapter  XV 405 

Superiority  of  trust  companies  over  individuals  in  trust  ca- 
pacities      45 

Supervision  of  trust  companies 14 

Supply  de^Dartment  records,  337;  clerk l66 

Surplus  fund,  accumulation  of 84 

Surplus  and  undivided  profits,  groAvth  of,  27,  28;  chart  show- 
ing      27 

Suspension  of  banks  and  trust  companies 22-24 

Tellers,  duties  of,  167;  records 260 

Tennessee,  28  ;  trust  company  laws  of 148 

Texas,  28 ;  trust  company  laws  of 149 

Ticklers    ". 200,201,210,220,226 

Time  and  labor  saving  devices 249,  408 

Title  insurance,  44,   81 ;  department.  Chapter  XII,  369;  pol- 

ic3^,  conditions  of 373 

Transfer  agent,  42;  duties  as,  413;  liabilities  as,  415;  meth- 
ods of  safe-guarding,  421 ;  transfer  clerk l68,  203 

Transfer  of  stock,  methods  and  forms  used,  203;  rules  for.  .  422 

Trial  balance 277 

Trust,  definition  of 33 

Trust  &  Deposit  Company  of  Onondaga,  Syracuse 10 

"Trust  Companies"  magazine,  quoted 24 

Trust  companies  in  foreign  countries.  Chapter  XVII 444 

"Trust  Companies  of  the  United  States,"  quoted 10,  17,  19,  20,  28 

Trust  Company  Section  of  The  American  Bankers'  Associa- 
tion     24,  32,  47,  74,  84,  175,  405,  414,  416,  421,  428,  436 

Trust   department,   work  of,    168;   forms   and   records    for. 

Chapter  VII,  1 72 ;  methods  of  increasing  the  business  of.  390 

Trust  funds,  24.;  the  investment  of 442 

Trust  officer,  duties  of l69 

Trustee  under  bond  issues,  duties  and  liabilities  of 4'28 

Trustee,  duties  of,  41,  209,  440;  various  functions  as,  34-37; 

power  to  act  as 80 

Undivided  profits   and  surplus 27,  28 

Union  Trust  Company,  New  York 10,  13 

Union  Trust  Company,  Providence • 24 

United  States  Mortgage  &  Trust  Company,  New  York 17 

United  States  Trust  Company,  New  York 7,  9,  lO 

Utah,  28 ;  trust  company  laws  of 151 

Vermont,  28 ;  trust  company  laws  of 152 

Vierling,  P'rederick 423 


GENERAL  INDEX.  475 


Virginia,  28;  trust  comp.iny  laws  of 1  J4 

Voucher  chocks    \t'>5 

Vouchers,  trust  department J-iP 

Walker,  (Juy  Morrison 5S 

Warehouse  Security  Company,  New  York 13 

Washington,  28;  trust  company  laws  of 155 

West  Virginia,  28;  trust  company  laws  of 137 

Williams,  Clark '. 54 

Wills,  record  of 232 

Wisconsin,  28;  trust  company  laws  of 159 

^^'ithdrawals  on  savings  accounts 'MS 

Women  as  employees ^03 

Worcester  Safe  Deposit  ^t  Trust  Company,  Worcester.  Mass.  11 

Working  force,  organization  of.  Chapter  Vl 1()2 

Wyoming,  28  ;  trust  comjiany  laws  of 1()0 

Young  Men's  Christian  Association 10 1 


INDEX  TO   FORMS. 


FIGURES  PAGES 

Advertising  list,  card  for 284,285  382,383 

Affidavit  to  loss  of  pass-book 251  354i 

Application    for   draft 215  331 

Appointment  of  deputy  (safe  deposit)  ....  90  237 

Authority  to  hypothecate  securities ...  302 

Balance  ledger    130  272 

Bond  memorandum  card 43  212 

Bond,   mortgage    183  308 

Bond  register   39-42  210-212 

Bonds,  record  of 57,61  221,222 

Bonds,  registered,  record  of 46, 47  214 

Bonds,  requisition   for 44  213 

Boston  ledger    128  268, 269 

Boston  ledger  for  general  accounts 155-157  289,  290 

Cash  book,  safe  deposit 9S  240 

Certificate  of  authority  for  joint  control.  .  .  234  344 

Certificate  of  authority  to  draw  funds 233  344 

Certificate  of  deposit   2l6  331 

Certificate  of  deposit  record 219  333 

Certificate  of  deposit  register 21 7^  218  332 

Certificate  of  deposit  of  pkge.,  safe  deposit.  100  244 

Certified   check    '. 220  333 

Certified  check,  debit  slip  for 222  335 

Certified  check  ledger  account 223, 224  335 

Certified  check  register 221  335 

Check    113  254 

Check,   counter    115,116  256 

Check,   official    212  329 

Check  on  savings  account 239  347 

Check  scratcher  or  journal 132  273 

Check,  trust  department 82  231 

Check-stub    1 13,  1 14  254,  255 

Check,   voucher    117-123  257-259 

Check  and  deposit  journal 131,  134  273, 274 

Claim  docket.  Probate 79  229 

Clearing  House  list 203  322,  323 

Collateral   line   ledger    169-171  298,299 

Collateral  loan   envelope 174  302 

Collateral   note    172  300 

Collateral  register 175,  176  303 

Collection    register    204,  205  325 

Collection  report 209  328 


IXDl.X   TO   roUMS.  47^ 

FIGfREiJ 

Collfotion    return    slip    ^.'10 

ColK'ctioti    tickler     vjOCi 

Collection  tracer    'Jl  1 

Coupon   enclosure    form 'lO.  51 

Coupon,   interest    181,  18^2 

Coupon    record     12, 18,  41) 

Credit    slip     83,  IT)'),  Kio 

Cremation  certiHcate ... 

Daily  report,  banking  department 1()'2 

Daily   report,  safe  d»'posit   department....  10.") 

Daily    statement     Ifiti-loi 

Dibit    slip     158,  1(J0 

Debit  slip  for  certified  cluck 'J-2'2 

Demand    loan    ledger Kik  1()5 

Deposit  slip IDS,  iOJ) 

Deposit    slip,    duplicate 1  TJ 

Deposit   slip,   savings i.'.'{(j 

Deposit  scratcher  or  journal lliS 

Deputy,  appointment  of.  safe  deposit }>() 

Deputy-ship,  safe  deposit,  form  for  revok- 
ing       pl 

Discount  register 1 9  i 

Discount    tickler    195 

Draft,  application   for 215 

Draft,  New  York 21S 

Draft  register    214 

Employment   application    envelope 28() 

Kndorsement  stamp,  loan  payment IS? 

Kxpi'use  voucher,  petty    U>1 

Expense    voucher    record 225.  22t) 

Express  and  registered  mail   record 53,51 

Eee  ledger    52 

(ieneral    bookkeeper's    proof 146 

(ieneral    cash    summary 12(> 

(ieneral    journal     1 47-149 

Clener.al    ledger    150,  151 

Idcutitication  card,  safe  deposit 89 

Income  on  investments,  record  of 202 

Index  of  inquirers   (Real   Estate  Dept.)  .  .  .  259 

Index  of  owners   (Real  Estate  Dept.) 258 

Index  of  pro})erties   (Real   Estate   Depi.)  .  .  254,255 

IniUx  of  securities  held  in  trust t)i 

Inilex  of  t.iiants    25(5.  257 

Iiuiiv  idual    bookkeeper's    proof    127 

Inilividual    journal     129.  1S1-KS4 

Individual    ledger    135,  IS7,  138 


P.VGES 

329 

326 

329 

216 

.217 

307 

189 

.215 

231,291 

,292 

211 

293 

247 

286-288 

291 

-292 

335 

29'» 

251 

,  2.'»2 

254 

346 

.273 

237 

238 

317 

318 

331 

330 

330 

401 

313 

292 

336 

218 

218 

283 

265 

284 

,285 

285, 

,286 

236 

321 

360 

360 

. 

358 

223 

359 

266 

271.273, 

274 

274,  276, 

277 

478  INDEX  TO  FORMS. 

FIGURES  PAGES 

Insurance  record   74^  271  219,  S66 

Insurance  tickler 73  227 

Interest  coupon,  mortgage  note 181,  182  307 

Interest  notice 189,  190  311, 315 

Interest  on  loans,  record  of 63  222 

Interest,  sheet  for  figuring 191  315 

Interest  statement 136  275 

Investment    ledger    201  321 

Investments,  record  of  income  on 202  321 

Journal,  general 147-149  284, 285 

Journal,  individual    129,  131-134         271,  273-274 

Journal,  loan l63  294 

Journal,  Real  Estate  Dept 274  368 

Journal,   savings    242-244  349, 350 

Journal,    trust    7,8,13-15  Tipt-igS 

Journal  and  ledger,  trust 22  197,  198 

Ledger,   balance    130  272 

Ledger,  Boston   128  268, 269 

Ledger,  Boston,  for  general  accounts 155-157  289,290 

Ledger,  coupon   12  189 

Ledger,  fee    52  218 

Ledger,    general    150,  151  285, 286 

Ledger,  individual 135,  137,  138        274,  276,  277 

Ledger,    line    65,169-171  223,298 

196-198  299,318 

Ledger,    loan    164-168 


jg.    ,...      ,311 


■'^1  295-297 

185J  ^     ^' 

Ledger,   safe   deposit 94, 95  241 

Ledger,    savings     245-249  351-353 

Ledger,  trust 9-11,  16-22  {\^Jl\ll 

Ledger  and  journal,  trust 22  197,  198 

Line  ledger,  collateral    '         169-171  298, 299 

Line  ledger,  discount 196-198  318 

Line  ledger  of  securities  held  in  trust 65  223 

Loan    application,    mortgage 177,178  304,305 

Loan    book     192  316 

Loan  ledger 164-8,  184-5  295-297,  311 

Loan  payment  endorsement  stamp 187  313 

Loan  and  income  journal l63  294 

Lost  pass-book,  affidavit  to 251  354 

Memorandum  of  new  tenant 263  363 

Memorandum  of  sale 260  361 

Mortgage  bond    183  308 

Mortgage   deed    ...  309, 310 


INDEX  TO  FORMS. 


iTi) 


FIGURES 

Mortgage  ledger    1 81,  1 85 

Mortgage   loan   applieation 177,  178 

Mortgage   loan    envelope 18() 

Mortgage  loans,  record  of 59,  6-2,  66,  67 

Mortgage  note 1 79,  1 80 

Mortgage  note  interest  coupon 181,  18'2 

Xew  York  draft   *213 

Note,  collateral    172 

Note,  common  form   1 99 

Note,  mortgage   1 79.  1 80 

Official  check 212 

Owners  of  property,  index  of 238 

Package  record    1 03 

Package,  certificate  of  deposit  of 100 

Pass-book 110.111 

Pass-book,  savings 2:5.1 

Pass-book,  affidavit  to  loss  of 251 

Paying  teller's  proof    125 

Pay-roll   slip    227 

Permission  to  inspect  j)roperty 2(v2 

Power  of  attorney  for  transfer  of  stock.  .  .  .  173 

Probate  claim  docket 79 

Probate  settlement  docket 6 

Proof,  general  bookkeeper's 146 

Proof,  general  cash 126 

Proof,  individual  bookkeeper's 127 

Proof,  paying-teller's   125 

Proof,  receiving  teller's 12 1 

Property,  index  of 251,  255 

Property,  list  of   269 

Property    listed,    description    of 253 

Real  Estate  Department  journal 271' 

Real  estate  loans,  record  of 59,  62,  66.  67 

Real  estate  loan  api)Iication 177,  178 

Real  estate  record 68,  69 

Receipt  for  bonds 45 

Receipt  for  certificate  of  storage 102 

Receipt  for  coupons    50 

Receipt  for  package  left  for  storage 100 

Receipt  for  rent   265 

Receipt  for  safe  rent 88.  101 

Receipt  for  savings  book 250 

Receipt  for  stock  certificate 30,  31 

Receipt  for  stock  left  for  transfer 27,  28,  29 

Receipt  and  identification  card,  safe  deposit.  89 

Receiving  teller's  proof 121 


PAGES 

311 

301 

,305 

313 

221 

-221 

306 

307 

330 

300 

319 

306 

3'29 

360 

216 

21  i 

2 .")  2 

.  253 

:M3 

■a:>  t 

26.> 

.  261 

338 

36s 

301 

229 

182 

283 

265 

266 

263 

.  261 

261 

,262 

358 

365 

357 

368 

221 

-221 

301 

.305 

2 1 9 

.  225 

211 

215 

216 

211 

361 

235, 

.  215 

351 

201 

202. 

203 

2.36 

261, 

,262 

480  INDEX  TO  FORMS. 

FIGURES 

Register  of  trusts 1-5 

Registered  mail  and  express  record 53,  54 

Release  from  mortgage ... 

Remittance    letter    207-209 

Removal  memorandum    264 

Rent    book    70,  71,  275 

Rent    notice    266,  267 

Rent,  receipt  for 265 

Rent  record 72 

Rent  roll-book 270 

Rental,  renewal  and  surrender  book 104 

Rents  collected,  statement  of 273 

Report,  daily 105,  162 

Report  of  sale 26l 

Report  to  Executive  Committee 193 

Requisition  for  bonds 44 

Requisition  for  supplies  or  repairs 268 

Return   slip    210 

Safe  deposit  department  cash-book 93 

Safe  deposit  ledger 94,  95 

Safe  deposit  register    92 

Safe  deposit  tickler 96 

Safe  register    97,  98 

Safe  rent,  receipt  for 88,  101 

Sale  agency  contract 252 

Sale,  memorandum  of 260 

Sale,  report  of 26l 

Savings  account,  check  on 239 

Sa\'ings  book,  receipt  for 250 

Savings  deposit  journal 243,  244 

Savings  deposit  slip    236 

Savings  ledger 245-248 

Savings  ledger  trial  balance 249 

Savings  pass-book 235 

Savings   vi'ithdrawal  journal 242 

Savings  withdrawal  slip 237,  238 

Securities,  record  of 56-62,  66,  67 

Settlement  docket,  probate 6 

Signature  card    106-7, 230-2 

Statement,  daily 152-154 

Statement  of  account    140-143 

Statement  of  borrower,  form  for 200 

Statement  of  rents  collected 273 

Statement  to  beneficiaries 84-86 

Stock   ledger    35-38 

Stock,  record  of 58,  6l 


PAGES 

175 

-181 

218 

312 
326-328 

363 
226,  368 
364,  365. 

364 

227 
365 
246 

368 

247 

293 
362 
316 

213 
365 

329 

240 

241 

239 
242 

242 

243 

235 

245 
356 
361 
362 

347 

354 

349 

,350 
346 

351 

,352 

353 

345 

346 

349 
,347 

219,221 

-224 
182 

250,341 

,342 

28fi 

-288 

278 

-281 

319 

,320 
368 

232 

207 

221 

-209 

IN  DFX   TO   FORMS. 


481 


FIG  i;  RES 

Stock  transfer  book  or  register 3:2-34 

Stop-payment  nieniorandinii    11-4,  li5 

Siihstitution  of  collateral,  form   for l66 

Supplies,    record    of 228 

Tax   book    75-78 

_  Tax  record    272 

Tenant,  memorandmn  of  new 263 

'I'eiiants,  index  of    2:')6,  257 

Tickb-r,  collection    206 

Tickler,  discount    195 

Tickler,  insurance    7.S 

Tickler,  safe  deposit yfi 

Tickler,    time    loan     188 

Tickb-r.   trust   department    2.S-2().  a  J 

Time   loan   ledger    Ifi7,  l()8 

Title,  application   for  guarantee  of 276 

Title  insurance  policy 277-282 

Title  insurance  policy  register 28.S 

Tracer,   collection    211 

Transfer  of  stock,  power  of  attorney  for.  .  \~:i 

Trial  balance  book l.'jj) 

Trust    regist»T    1-.') 

Visitors'   register,  safe  deposit 99 

Voucber  cbeck    1 17-12.S 

\'ouclier,   petty   expense    l6l 

\'oucb«'r,  trust  department 80,  81 

\'oucber   record,   «xpense 225,  226 

Wills  on  Hie,  record  of 87 

A\'itlidrawal,  ackn«)wledgment  of  notice  of.  .  211 

NN'itlidrawal  journal,  savings    2I'2 

Withdrawal,  notice  of 2iO 

Witbdrawal  slip,  savings 2.S7,  2.S8 


PAGES 

205,  206 
282 
296 
838 
228 
867 
S6S 
859 
826 
818 
227 
242 
3\S 
199-201,220 

296,  297 
.S70 

.S7 1-377 
378 
329 
301 
277 
175-181 
244 

257-259 
292 

229,  '2S0 
336 
288 
348 
349 
347 

346,  3  t7 


^"^^ '  -I 


OCT 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 

LOAN  DEPT. 

This  book  is  due  on  the  last  date  stamped  below,  or 

on  the  date  to  which  renewed. 

Renewed  books  are  subject  to  immediate  recall. 


«Apf6l©F 


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uweiss 


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LD21A-507n-12,'60 

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General  Library 

University  of  California 

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